Toyota and Mazda strengthen ties

Toyota and Mazda have announced a deepening of their industrial alliance in which each Japanese car-maker will purchase a large chunk of the other and the companies will establish a joint-venture US factory to produce vehicles for both brands.

The deal is an extension of the Toyota-Mazda partnership formally signed in May 2015, when it was understood Japan’s largest car-maker had agreed to give Mazda access to its hybrid, plug-in hybrid (PHEV) and fuel-cell technologies in return for the smaller car-maker’s petrol and diesel engines.

The Japan-market Mazda3 hybrid already employs a Toyota Prius drivetrain and since then Mazda announced it will produce its first EV in 2019 and its first PHEV in 2021.

For its part, Mazda has always said it would share its vehicle technologies, including the ground-breaking compression-ignition (HCCI) system that will debut in the all-new 2018 Mazda3 with the right partner.

The companies’ new announcement goes well beyond that technology tie-up, which was also believed to include collaboration on autonomous vehicle tech including connected infotainment systems and vehicle-to-vehicle and vehicle-to-infrastructure know-how.

Both car-makers have now agreed to buy 50 billion yen ($A570 million) worth of shares in each other, meaning that by October Toyota will own 5.05 per cent stake in Mazda, which in turn will claim a 0.25 per cent share in Toyota.

As part of the deal, the companies will by 2021 build a new 50/50 joint-venture factory at a location yet to be announced in the US at a reported cost $US1.6 billion ($A2b).

Expected to employ about 4000 workers, the new plant will produce Mazda crossover vehicles that it said it “will newly introduce to the North American market”.

As in Australia, Mazda already sells the CX-3, CX-5 and CX-9 in the US, so the new factory may produce – for both North America and Australia -- the CX-4 and upcoming CX-8 that are currently only confirmed for sale in China and Japan respectively.

Meantime, the plant – which is expected to deliver up to 300,000 cars annually -- will manufacture Toyota Corollas for sale across the USA, Canada and Mexico.

The joint plant will be an extension of previous model sharing arrangements between Mazda, which will team with Isuzu to produce its next BT-50 ute, and Toyota, which has teamed with BMW to produce its born-again Supra sports car.

Mazda currently produces the Toyota Yaris iA – a rebadged version of the latest Mazda2 sedan – for North America at its new factory in Mexico and a rebadged version of Toyota’s HiAce is expected to become a belated replacement for Mazda’s E-Series van.

It will be the first time Mazda has produced a model in the US since 2010, when the previous-generation Mazda6 was made at Flat Rock, Michigan, before the company sold its 50 per cent share in the AutoAlliance factory back to Ford. Prior to the that, the Mazda 626 and Ford Probe were produced alongside each other on a common platform.

Aside from increased production capacity and efficiency, the extended relationship between Toyota and Mazda is also expected to lead to the development of competitive future technologies for both companies due to shared investment in research and development.

In a press release, Toyota acknowledged not only the imperative for more environmentally-friendly vehicles but also the need for high-quality, next-generation EVs to combat "the entrance of competitors from other industries, as well as the diversification of mobility-related businesses".

Translation? The global automotive leader is taking the likes of Tesla, Apple, Google and other tech companies very seriously, as they continue to forge ahead with EV and autonomous technology.

"The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars. It has also sparked Toyota's competitive spirit, increasing our sense of not wanting to be bested by Mazda,” said Toyota president Akio Toyoda.

"This is a partnership in which those who are passionate about cars will work together to make ever-better cars. It is also the realisation of our desire to never let cars become commodities.”

Mazda president and CEO, Masamichi Kogai, had a similar tone.

"Nothing would please me more than if, through this alliance, we can help to energise the auto industry and create more car fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders."