Toyota, Mazda Announce “Engagement”

Japanese automakers expected to launch series of joint projects.

by on May.13, 2015

Toyota's Akio Toyoda, left, and Mazda's Masamichi Kogai are all smiles after the two companies agreed to partner up on powertrain development projects.

Japan’s largest automaker is teaming up with one of the country’s smaller manufacturers in a nascent alliance that underscores the increasingly competitive nature of the global auto industry.

Toyota Motor President Akio Toyoda suggested the new partnership with Mazda Motor Co. might be thought of as “more of an engagement” than a marriage, however, suggesting that, at least for now, a full merger is not in the cards. But industry analysts anticipate that the two makers could eventually work together on everything from platform to powertrain development, as well as joint production ventures.

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“I’m excited to think about what kind of chemical reaction will be concocted, what great products will be created, when our engineers work together,” Toyoda told reporters at a news conference in Tokyo.

The auto industry has seen a rapidly expanding list of joint ventures and broader alliances formed in recent years, including one that pairs Germany’s Daimler AG with the older Renault-Nissan Alliance. Fiat Chrysler CEO Sergio Marchionne has focused on the need for industry consolidation in recent months and has indicated his trans-Atlantic company is looking for additional partners.

Toyota, however, has traditionally done most things on its own, only in recent years looking at the potential benefits of partnering. It teamed up with Subaru, for one, to develop a small sports car it sells as the Scion FR-S in the U.S.

It also has worked with Mazda on a number of projects, including the development of microcars – known in Japan as kei cars. Mazda, meanwhile will produce the new Scion iA sedan at a new assembly plant the smaller Japanese maker is setting up in Mexico.

With margins stretched thin and the industry facing strict new emissions and fuel economy rules around the world, manufacturers are putting an emphasis on economies of scale, so, “Sharing platforms and powertrains is likely” going forward, said David Sullivan, a senior analyst with consultancy AutoPacific, Inc.

He suggested Toyota may find ways to use its partner’s highly efficient SkyActiv gasoline engines while sharing with the Hiroshima-based Mazda its own hybrid engine systems.

Mazda, Sullivan noted, has a good reputation for building enthusiast-oriented models like the Miata, and could help add some more passion to the line-up at Toyota, “a company not known for its fun-to-drive characteristics.”

Toyoda, the grandson of Toyota’s founder, met with his counterpart at Mazda, President Masamichi Kogai at a Tokyo hotel on Wednesday to announce the deal.

(Toyota rounds out year with $19.8 billion profit. For more, Click Here.)

Declaring he has “tremendous respect” for Toyota’s drive and “the way Toyota cherishes its roots,” Mazda chief Kogai said, “I hope that by working together to make cars better, we can raise the value of cars in the eyes of consumers while also enhancing the manufacturing capabilities of our home, Hiroshima, and all the communities we are involved in as well.”

Few appeared surprised to see Mazda jump at a chance to expand its ties with Toyota. Kogai has openly discussed the need to find a partner – or partners – since winding down its long relationship with Ford Motor Co. several years ago. At its peak, Ford held a 33.4% share of Mazda, but cut that to 2% under CEO Alan Mulally.

(Click Here for details about foreign automakers enjoying strong April sales.)

The Japanese maker has also worked with Fiat Chrysler, jointly developing a new platform for the next-generation Mazda Miata that also will be used for a new Fiat-branded sports car.

For its part, Toyota reported record $19.8 billion earnings, a 19% increase, for the fiscal year that ended March 31. After several years of reining in growth to address some fundamental internal issues, Toyoda has put the company back on the fast track.

(To see more about Mazda’s new MX-5 Miata, Click Here.)

“Many people assume Toyota is just about money,” Toyoda said during the Tuesday news conference. But he stressed that, “Toyota is trying to be reborn as a company that makes ever better cars.”

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One Response to “Toyota, Mazda Announce “Engagement””

  1. Jorge says:

    Looks like it’s too late for Marchionne and FCA…

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