Toyota and Mazda enter long-term deal to share technologies

Article by Andrew Christian, on May 14, 2015

Amid rising development costs and more stringent emissions rules, Toyota Motor Corp. and Mazda Motor Corp. have decided to enter into a “long-term partnership” that focuses on projects related to technologies, products, and manufacturing. On May 13, the automakers announced that a joint committee will be formed to assess how the strengths of each company can be best utilized.

There have been reports that Toyota and Mazda have been considering collaborations on many projects. One of these deals is of Toyota supplying Mazda with its hydrogen fuel cell system and plug-in hybrid technology. In return, Mazda will give Toyota access to its fuel-efficient Skyactiv gasoline and diesel engine technology.

At the joint press conference, no mention was given to specific examples of what this cooperation means. While no details were provided by Toyota CEO Akio Toyoda and Mazda CEO Masamichi Kogai, they did cite the possibility of joint manufacturing, hybrid vehicles and fuel cells. The top honchos also didn’t confirm a capital tie-up or provide a timeline on upcoming joint projects.

Toyoda said that no marriage has taken place and that rather, this is “an engagement announcement.” For several years, Toyota and Mazda have had technical exchanges. Toyota has been supplying hybrid drivetrain technology for the Mazda3 sedan. In addition, Mazda is putting together a Skyactiv-equipped subcompact sedan for Scion at its new factory in Mexico.

In particular, Kogai said the new tie-up would “transcend the boundaries” of whatever agreement they already have. Automakers around the world have been pooling resources in the development of green cars. For instance, Nissan Motor Co. has been sharing the costs of advancing hydrogen fuel cell technology with Ford Motor Co. and Daimler AG.

Meanwhile, Honda Motor Co. and General Motors have teamed up for this same purpose. A long-time advocate for industry consolidation is Fiat Chrysler Automobiles CEO Sergio Marchionne who believes that major automakers need to begin working together and stop the wasting of billions to develop the same products and technology.

Last month, Marchionne said that it’s “bizarre” that the consumer doesn’t really get much value from capital consumption. He refers to it as “pure economic waste.” Marchionne had released an analysis titled: “Confessions of a Capital Junkie,” where he said that about 40-50% of vehicle development expenses may be shared by automakers.

In his calculations, doing so will return $2.8 billion to $5.1 billion euros of capital annually. Smaller Japanese automakers like Mazda and Fuji Heavy Industries (the maker of Subaru) consider tie-ups with big companies like Toyota will complement their small r&d budgets.

For example, Fuji Heavy and Toyota had a deal to develop and produce the BRZ sporty coupe, which is offered in the U.S. as the Scion FRS. Daihatsu, a member of the Toyota Group that makes minivehicles, makes Japan-intended minicars for Fuji Heavy.

Toyota has a capital stake in Fuji Heavy. Kurt Sanger, an auto analyst with Deutsche Securities Japan, said that Mazda certainly can’t work on fuel cell technology alone. He cited how Ford, Daimler, and Nissan have come together for this project.

Sanger pointed out that it makes sense for Toyota to recruit Mazda since the incremental volume that Toyota can get from the sales of fuel cell and plug-in hybrid systems to Mazda and others may widen scale and cut production costs. [source: Toyota]

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