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Mazda to build small car for Toyota for sales in North America

November 09, 2012|By Jerry Hirsch
  • Mazda will build a version of its Mazda2 sub-compact for Toyota.
Mazda will build a version of its Mazda2 sub-compact for Toyota. (Mazda )

Pursuing a strategy of working with other automakers, Toyota Motor Corp. said Friday that it will have Mazda Motor Corp. build a small car for the Toyota brand.

The sub-compact, which will be sold in the U.S., will be based on Mazda’s tiny Mazda2, a car that competes with the Ford Fiesta, Hyundai Accent, Chevrolet Sonic and Honda Fit.

Toyota said Mazda will build about 50,000 of the yet-unnamed cars at a plant that's under construction in Mexico and set to open in late 2014. The cars, which will be sold as a Toyota, will go on sale sometime in 2015, the company said.

Toyota did not provide much information about the vehicle and would not say if it will replace the Yaris, a similar-sized car that Toyota builds in Japan.

"Through the agreement, TMC aims to strengthen its North American vehicle lineup, while Mazda aims to increase production efficiency and contribute to its profitability," the companies said in a statement.

The deal allows Toyota to add to its North American production and, depending on what it does with the Yaris, substitute a car that's built in the region and benefits from the North American Free Trade Agreement for one that’s built in Japan and has a higher shipping expense as well as a foreign exchange rate penalty because of the strength of the yen.

Though getting good marks for reliability, the Yaris generally gets poor reviews from the automotive media. Through the first 10 months of this year, its sales have lagged rivals. Toyota has sold about 26,000 units. During the same period, Honda has sold about 42,000 Fits, Ford has sold 47,000 Fiestas and Chevrolet has sold 70,000 Sonics.

A Toyota spokesman said the company was not commenting on the future of Yaris or where this new vehicle would fit in the lineup other than to say that it is a sub-compact car that won't be sold for three years.

Although Toyota is the world's largest auto company, it's not afraid to work with other automakers. It jointly developed the Scion FR-S with Subaru, which manufactures the car. The entry-level vehicle has received rave reviews. Toyota also went to Tesla Motors for help designing and building the drive train for the electric version of the RAV-4 sport-utility vehicle.

Camry sedans are built at Toyota's plant at Kentucky and at an Indiana factory operated by Subaru.

"It feels like they are branching out to find competencies in other brands where they fall short," said Jessica Caldwell, an analyst with auto information company Edmunds.com.

"Toyota has been criticized for a lack of sporty appeal, so joining forces with Subaru to create a more authentic sport car seemed like a natural fit given their relationship," Caldwell said. "The Mazda2 also seems to follow a similar logic. Mazda, known for its spirited zoom-zoom mantra, is miles away from the image of Toyota's current small, economy-car lineup.”

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