Japanese automotive giants Toyota Motor Corporation and Mazda Motor Corporation have signed an agreement to enter a business and capital alliance, with the aim of further strengthening their lasting partnership.

The agreement is a testament to the positive result of two years of collaborative and deliberate discussions between the two companies, a statement said.

The companies agreed to establish a joint venture that produces vehicles in the US, jointly develop technologies for electric vehicles, jointly develop connected-car technology, collaborate on advanced safety technologies and expand complementary products.

In addition, together with the aim of advancing and strengthening their long-term collaboration, Toyota and Mazda agreed to a capital alliance arrangement that preserves independence and equality for both companies.

In the capital tie-up, the two companies have agreed that Toyota will subscribe for and acquire shares to be newly issued by Mazda through a third-party allotment, and at the same time Mazda will subscribe for and acquire third-party allocation shares of treasury stock disposed of by Toyota in the equivalent amount in value to the Mazda shares. The value of the shares mutually acquired by both companies will be equivalent.

Toyota president Akio Toyoda said: "The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars. It has also sparked Toyota's competitive spirit, increasing our sense of not wanting to be bested by Mazda. This is a partnership in which those who are passionate about cars will work together to make ever-better cars. It is also the realization of our desire to never let cars become commodities."

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 car fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders."

Over the medium- to long-term, the two companies will build a favourable relationship that respects the autonomy and equality of each party and works toward success with the agreed joint projects. With the aim of creating new types of value for future mobility, they will accelerate and enhance bilateral cooperation as long-term partners and contribute to the development of a sustainable society by exceeding customers' expectations.

Business alliance

As part of the new alliance, Toyota and Mazda have agreed to explore establishing a joint venture plant in the US with equal funding contributions. The plant would have an estimated annual production capacity of approximately 300,000 units.

Pending approvals and authorization by relevant government agencies, the companies will begin to examine detailed plans with the goal to starting operations of the new plant in 2021. The plant will require a total investment of approximately $1.6 billion, and will create up to 4,000 jobs.

At the new plant, Mazda expects to produce cross-over models that Mazda will newly introduce to the North American market, and Toyota plans to produce the Corolla for the North American market.

Jointly develop technologies for electric vehicles

With increasing demand and expectations for electric vehicles worldwide, Toyota and Mazda are to explore joint development of technologies for the basic structure of competitive electric vehicles, mobilizing and exchanging expertise freely and actively. These technologies will allow the companies to respond quickly to regulations and market trends in each country. Specific details of the collaboration will be determined as the companies work together going forward.

Jointly develop connected technology

Toyota and Mazda will work together to jointly develop technologies for onboard multimedia infotainment systems in preparation for increased use of in-car information technologies and the increasing demand for connected technologies. In addition, Toyota will cooperate with Mazda in Toyota's vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) technologies with the ultimate goal of creating a mobile society devoid of accidents. – TradeArabia News Service