Toyota and Mazda play Trump's card

Georgetown Kentucky Toyota Plant

Mazda president and CEO Masamichi Kogai said: "Nothing would please me more than if, through this alliance, we can help to energize the auto industry and create more vehicle fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders". Shifting production of those cars out of a plant in Canada is going to enable Toyota to boost output of RAV4 crossovers.

The companies expect the plant to begin operations by 2021.

Toyota will produce the Corolla model for the North American market, while Mazda will make cross-over models.

The announcement was greeted with a congratulatory tweet from President Donald Trump, who campaigned on a promise to bring back manufacturing jobs to the US. With the investment, both automakers can hope to prove their good American corporate citizenship and appease the Trump administration's concerns about jobs moving overseas.

Lentz said he could not say what impact Trump's comments had on a decision that was under consideration for some time with Mazda because it was a decision made by executives at both vehicle companies in Japan.

Mazda president Masamichi Kogai.

Toyota initially had been planning to produce Corollas at its new $1 billion plant being built in Mexico, prompting Trump to threaten punitive tariffs.

The deal is expected to involve a joint-venture auto manufacturing plant in the USA, working together on green technology and a capital alliance.

The automakers plan to produce Toyota Corollas and a new Mazda SUV crossover at the new plant, and the companies said they could eventually build other cars including electric vehicles.

Fear of falling behind in the growing global market for electric vehicles amid stricter regulation of emissions was apparently the impetus behind Toyota Motor Corp.'s capital tie-up Friday with Mazda Motor Corp.

The two companies have each agreed to buy 50 billion yen ($570 million) worth of shares in their partner. He praised Mazda as a great partner in that effort.

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The companies said their collaboration will respect their mutual independence and equality.

Toyota is also courting compact vehicle maker Suzuki Motor Corp.to cooperate on R&D and parts supply, as Toyota seeks to tap its smaller rival's expertise in emerging Asian markets.

The sheer cost of the plant also makes a partnership logical, as it boosts cost-efficiency and economies of scale.

Indeed, the plant reached 500,000 cars faster than any other plant in Toyota history, and a year ago it won a coveted J.D. Power Initial Quality award.

Mazda, for its part, stands to gain from a deal that gives the small automaker a production foothold in the United States.

Among Japanese carmakers, Nissan Motor Co. leads the pack with the Leaf, the newest version of which will be unveiled next month.

This picture shows the logo of Japan auto giants Toyota Motor Corporation and Mazda Motor Corporation in Tokyo on August 4, 2017.

Toyota and Mazda Motor Corp. are set to announce a partnership, according to a source familiar with the matter.

In the past, Toyota was not overly bullish on electric vehicles, which have a limited cruise range. Mazda's Hiroshima assembly plant has long turned out front-wheel-drive sedans and sport/utilities alongside the MX-5 Miata and until recently, the RX-8.

Toyota has 10 US plants in eight states in an arc that runs from West Virginia through Kentucky, Indiana, Alabama, Mississippi and Texas. It raised its fiscal full year profit forecast to 1.75 trillion yen ($16 billion) from the earlier forecast of 1.5 trillion yen ($14 billion). It is expected to build its 1 millionth vehicle this year.

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