Mazda Agrees To Build Subcompact Cars For Toyota At Mexican Factory In Guanajuato

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Mazda Motor Corp. will expand its relationship with Toyota Motor Corp. now that it has an agreement with the auto giant to build models intended for the North American market at its Mexican factory once the facility begins operations.

The Mazda plant, currently under construction in Guanajuato, Mexico, will begin producing about 50,000 sub-compact Toyota vehicles starting around the summer of 2015, Toyota and Mazda said in a joint statement.

The Mexican plant is slated to go onstream in the January-March quarter of 2014 with an annual output capacity of 140,000 vehicles employing around 3,000 people. Mazda intends to boost the facility's capacity to 200,000 vehicles when it begins building Toyota subcompacts so that it can produce 50,000 vehicles other than its own. Mazda expects a jump in profitability through procurement of common parts with Toyota.

Its deal with Toyota is good for both companies, but Mazda stands to benefit more, said Noriyuki Matsushima, a Tokyo-based analyst at Citi Research.

Mazda will not only save on the capital investments required for the new factory, but the additional production for Toyota will lower the plant's fixed production costs per vehicle, he said. Toyota will benefit by shifting production of subcompact cars to Mexico from Japan, wjere exports aren’t profitable at current exchange rates.

Globally, Toyota plans to launch 21 new hybrid models by the end of 2015 and will make further efforts to expand its hybrid-vehicle product lineup and sales territories, the automaker said.

More than 80% of Canada's hybrid vehicle sales are Toyota and Lexus hybrids, the automaker said.