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Mazda And Toyota Break Ground On Joint-Venture Alabama Plant

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Mazda Toyota Manufacturing 2019 Rendering
Photo: Toyota

Japanese multinational automakers and automotive giants, Mazda and Toyota, have started a joint venture partnership in an Alabama plant as they broke ground on July 10, 2019. The assembly plant has been priced at $1.6 billion and is the first Mazda factory in the U.S which plans to build a new sport utility vehicle.

In January 2018, the largest Japanese automaker announced its plans to produce Corolla cars in the enormous facility but decided to shift production to a “new, yet-to-be-announced SUV.” According to Toyota, the sudden shift was prompted by the change in U.S. consumer appetite for motor vehicles. In recent years, U.S. consumers’ purchasing habits have shifted from cars to SUVs, crossovers, and pickup trucks.

This change has greatly affected Toyota’s sales. Last week, the company released a report citing a decline in its sales of U.S. Corolla cars by 5 percent during the first six months of the year, with only 152,868 deliveries. Overall, the automaker’s car sales slumped by 8 percent during the same period. Also, sales of SUVs have been down but only at a minimal 1 percent. This slowdown also reflects an overall drop in U.S. consumers’ purchasing of new vehicles during the first half of 2019, which dipped by 2.2 percent.

The Toyota Corolla might be the world’s best-selling vehicle, especially with a stronghold in the U.S., with a monthly average of 20,000 units sold. But, the changing consumer demands of the study has forced the automaker to go where the market has been moving in recent years. Still, Toyota will continue its Corolla production by relying heavily on its Mississippi and Japan plants.

The new facility covers a 2,500-acre area in Alabama and is projected to be up and running by 2021. Currently, the joint venture focuses on massive recruitment to staff around 4,000 new jobs that can help Mazda assemble about 300,000 SUVs annually. Also, the site is in close proximity, approximately 14 miles, from Toyota’s engine plant in Huntsville.

It is no wonder why Toyota and Mazda chose Alabama for its giant facility. The U.S. state is home to over 150 auto suppliers that contribute to 57,000 jobs in the automotive industry, making it the fifth-largest producer of cars and light trucks. Despite concerns that the new production will lead to surplus and a continuous drop in auto sales, the joint venture is here to stay.

On the other hand, the self-driving venture of Toyota and Softbank Group that aims to develop next-generation transportation services has attracted five Japanese automakers that include Suzuki, Isuzu, Mazda, Subaru, and Daihatsu. The competitors will unite to invest in Monet Technologies, the joint venture that aims to provide on-demand rides in self-driving motor vehicles. Apart from this new partnership, the five new investors have ties with Toyota in electric vehicles and other auto ventures.

Early this year, Honda and Hino have joined the pack and invested over 200 million yen each for a 10 percent share. Softbank and Toyota hold 80 percent. With the entry of the five new members which will take a certain percentage in the equity pie, Nissan and Mitsubishi remain the Japanese automakers that have not participated in the consortium. Nissan has already partnered with Renault and is expected to launch a joint venture as well.

This is a collaborative article.