Toyota and Mazda announced late Friday in Japan that they would strengthen their partnership with a formal capital alliance. In 2015, the industrial giant from Aichi and the small carmaker from Hiroshima agreed to work together, but it was little more than a handshake. What was called “an engagement” then by Toyota’s CEO Akio Toyoda has now become a marriage, consummated with an actual exchange of stock shares.
As part of the deal, Toyota will take ownership of 5 percent of Mazda stock. Mazda, being much smaller, will take just 0.25 percent of Toyota’s. In addition, the two will build a jointly owned plant in the United States.
The location of the factory hasn’t been determined yet, but a US manufacturing base will be a great help to Mazda. Currently, the all of the company’s US-sold products are built in Japan, and a strong yen has been heavily eating into its profits. Toyota and Mazda estimate that the plant will go on-line in 2021.
Beyond the factory, everything else we said in our analysis back in 2015 still holds true. Mazda will benefit from Toyota’s research into alternative power such as hybrids, hydrogen and electric vehicles.
Currently, Mazda sells none of those types of cars in the US (a hybrid Mazda 3 with Prius tech is sold in Japan), instead swearing that humankind has not squeezed every efficiency it can out of internal combustion engines yet. Admittedly, the SkyActive engines post notable numbers (returning 37 highway mpg in the Mazda 3) and what we hear about the next generation is even more impressive, but since the partnership was announced two years ago several countries have made plans to flat-out ban internal combustion engines in the coming decades.
It’s less clear what Toyota wants, but if we had to guess, we’d say it’s an understanding of how tiny little Mazda — whose global annual sales last year of 1.586 million paled in comparison to Toyota’s 10.18 million — can consistently build cars universally hailed as beautiful, efficient, and fun to drive. There is a culture of passion at Mazda that Toyota lost around the time the Supra was axed.
We know it’s ominous whenever a large company gets its claws on a beloved smaller one, but we think this will be good for both firms. In this age of consolidation, Mazda would not have survived on its own for much longer, and it’s better to be allied with a company who is not seeking to force budget cuts and platform sharing down Hiroshima’s throat. It’s a friendlier merger than what happened with Nissan and Mitsubishi, and Mazda lives to Miata another day.
The full press conference with English translation can be seen below.