Frenemies Tighten Bond, as Toyota and Mazda Sign a New Deal

Toyota is no stranger to alliances, as it’s prided itself in working with a number of automakers over the years. Most recently, these automakers have included BMW, Subaru, and Mazda. Recently Toyota and Mazda’s relationship became even closer thanks to a new capital alliance between them.

The financial end of the deal will involve Toyota buying newly issued shares in Mazda through a third-party allotment. Mazda, on the other hand, will take on Toyota’s disposed treasury stock in the same value as the shares Toyota acquired. This gives both companies even say in what goes on.

In actual numbers, Toyota will acquire 31,928,500 Mazda shares, giving it 5.05 percent ownership in the company. Mazda, on the other hand, will get the same value in treasury stock, but it will only account for a 0.25 percent ownership of the much larger Toyota.

The deal will have four focuses:

First, it will result in more vehicles being built in the U.S. Toyota and Mazda will accomplish this by exploring a joint-venture plant in the U.S. The goal is to invest $1.6 billion and have the plant up and running at its 300,000-unit capacity by 2021. Mazda plans to manufacture its crossovers in this new plant, while Toyota will move the Corolla here as well.

Next, Toyota and Mazda will work together and openly share technology that will create the basic structure for a competitive electric car. There is no timetable on this, but with Toyota’s years of electrification and Mazda’s expertise in weight savings, this should create one hell of an EV.

Third, Toyota and Mazda will collaborate on connected technologies and advanced safety. At the forefront of this will be the development of technology for multimedia infotainment systems that can handle more in-car information. Mazda also will begin participating in the development of Toyota’s vehicle-to-vehicle and vehicle-to-infrastructure technology.

Finally, the two will work more on complementary vehicles. Mazda already provides Toyota the Mazda2 sedan as the base for the Yaris iA. Toyota will reciprocate with a compact commercial van for Mazda in the Japanese market. More shared vehicles will be considered in the future.

The deal is expected to be finalized on Oct. 2, 2017. Stay tuned for updates.