Toyota, Mazda plan to invest $1.6 billion to build US Plant

Toyota to take 5 percent stake in Mazda Nikkei

The two firms are also planning a joint venture to build a shared $1.6bn (£1.22bn) factory in the U.S. with the capacity to produce 300,000 cars per year.

President Donald Trump had criticized Toyota and other automakers for taking auto production and jobs to Mexico, saying vehicles for the USA market should be built by US workers.

Toyota said it plans to open the factory with Mazda by 2021, with the location yet to be decided.

"A great investment in American manufacturing!", he tweeted.

Aside from building the new US plant, the companies will look to jointly develop technology for electric vehicles and connected cars, as well as collaborate on advanced safety technology.

Japan's two major car-makers Toyota Motor Corp. and Mazda Motor Corp. said Friday that they have signed an agreement to enter a business and capital alliance to deal with the growing competitions and challenges in the industry.

Analysts from Citi said: "The reported plan to build a new plant in the US looks rational given that SUV capacity is tight at both companies and protectionism concerns remain".

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Toyota had meant to move Corolla production to a new plant in Mexico from the current site in Canada. "NO WAY! Build plant in US or pay big border tax", Trump said in a post on Twitter. Toyota also has plants in Indiana, Kentucky and Texas.

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. "With the investment", the AP said, "both automakers can hope to prove their good American corporate citizenship and appease the Trump administration's concerns about jobs moving overseas". "Build plant in US or pay big border tax". Drawing closer to Mazda and other Japanese automakers helps. The location of the USA plant has not been made public yet.

Mazda will benefit from the deal that gives the small automaker a production foothold in the United States.

Mazda entered the U.S. market in as Mazda Motor America in 1970.

However it's not only electric cars that will benefit from the partnership.

Also Friday, Toyota reported its April-June profit was 613.0 billion yen ($5.6 billion), up 11 percent from 552.4 billion yen a year earlier.

According to Reuters, Mazda, who has sales are one eighth of Toyota's, only has a research budget of 140 billion yen per year - compared to Toyota's one trillion yen.

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