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

Georgetown Kentucky Toyota Plant

Toyota has not yet released the size of the building, but this plant will produce fewer cars than a facility it owns in Kentucky, which puts Toyota on the following list of companies and organizations with the largest facilities in the United States.

The Toyota Mazda plant is due to begin operations by 2021.

Toyota said it would not move Corolla production to its plant in Mexico, which is now under construction, but it would instead make its Tacoma model there.

Toyota President and CEO Akio Toyoda speaks in Tokyo, March 13, 2015.

Corolla production in the U.S. should also take some of the sting off the potential import tax for Toyota, too, as it's one of the brand's bestsellers across the pond, alongside the RAV4 and Camry. Toyota said Trump's views had not influenced the decision.

Donald Trump attacked Toyota earlier this year over its plans to build a new factory in Mexico, threatening to hit the Japanese carmaker with a "big border tax" if the plant was not built in the US. "Because of its strong dependence on North American market, Mazda absolutely needs to expand its manufacturing footprint here".

The company continues to expect consolidated vehicle sales of 8.9 million units for the year, in consideration of the latest sales trends worldwide. If not, the plant will have the flexibility to shift to another model, according to spokesman Scott Vazin.

As part of the deal, Toyota will take a 5% stake in Mazda, with Mazda receiving a 0.25% in its larger rival.

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Toyota posted an operating profit of 574.29 billion yen for April-June, down 11 percent from 642.23 billion yen a year ago.

In addition to developing electric auto and connected vehicle technologies, Toyota and Mazda will also work together on future vehicle safety features. But recent breakthroughs in batteries allow for longer travel per charge. Traditional automakers now face a challenge from the Renault and Nissan and Mitsubishi alliance.

Toyota ramped up incentives to move slow-moving passenger cars, but it hopes to rein in the outlays with the launch of the next-generation Camry sedan later this year.

Presumably as a result of this, Japan's number-one carmaker is seeking a partnership with smaller Mazda, including a capital tie-up and plans to build a joint factory in the US.

In the US market, Toyota has been struggling to sell sedan-type cars as the sales of large vehicles are increasing because of low gasoline prices. The compact model is now made in Canada and in the USA state of Mississippi. The alliance is also an attempt to catch up with rivals in the race for electric auto technology, as tighter global emissions rules loom, along with the entry of new players into the market. The planned vehicle plant will create about 4,000 jobs.

Vehicle sales increased in Japan, North America, and Europe, but declined in Asia. "Maybe Toyota realizes this", Reuters reported.

The Toyota Corolla is the world's best-selling automobile.

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