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Toyota takes stake in Mazda, links up for $1.6 billion US plant

05 August, 2017, 00:22 | Author: Paula Vaughn
  • The automakers will discuss building a plant together in the southern U.S

Toyota may be the king of hybrid tech but neither brand has really got to grips with full EV cars with much enthusiasm. The manufacturer was once in a long-running alliance with car-maker Ford (NYSE:F).

Subaru's sales gains contrasted with the 5.7 percent drop in North American sales at Japan's No.3 automaker Honda Motor and a 6.0 percent fall at Mazda Motor Corp.

The two automakers are expected to announce the plan later in the day.

"We don't have a lot of information because it's a joint venture with Mazda, and there were very few people in the loop in North America who knew about it, and we weren't one of them", said Mike Botkin, vice president of administration at Toyota Mississippi.

The Japanese auto giants agreed to establish a £1.6bn joint venture plant in the USA with equal funding contributions, with the goal of beginning operations in 2021 and eventually producing 300,000 vehicles a year.

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It has thus been ruled out of the olympic games-2016 in Rio and will not be at the start of the Global 2017, which begin Friday in London.

Toyota said Friday that it would maintain investment and hiring plans at its Mexico plant, but it will locate additional production of the Tacoma mid-size pickup truck at the factory instead of the Corolla, which had been set to move there from an operation in Ontario, Canada. Trump has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.

After reassessing the auto industry market, Toyota has changed its strategy to make Corollas at a plant in Guanajuato, Mexico. The Mazda CX-3, CX-5 and CX-9 are already on sale in the United States, so this could be one of Mazda's upcoming coupe-SUV models. But as fully battery-powered cars gain favor with regulators and consumers, the company faces new challenges - both from traditional competitors and new players like Tesla.

President Donald Trump had criticized Toyota and other automakers for taking auto production and jobs to Mexico, saying vehicles for the US market should be built by USA workers.

Both brands will be mutually acquiring an equivalent amount of share in each other. Toyota is to take a 5% stake in Mazda, while Mazda will also invest in Toyota.

Toyota is expected to announce a 16 percent drop in its quarterly operating profit, according to analysts surveyed by Thomson Reuters I/B/E/S, while Nissan last week posted an nearly 13 percent slide in profit, dragged by rising incentives to sell its cars in the United States.

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