Mazda to Build Subcompact Car for Toyota in Mexico; Toyota Yaris Shunned

By Jacob Brown | November 09, 2012
Toyota has announced that it will begin building a subcompact car in conjunction with Mazda at a new factory being built in Mexico. But we've got to tell you, this one has us pretty well baffled. Here's why: Toyota is planning to make 50,000 Toyota-branded subcompacts for the U.S. based on the same architecture as the Mazda2, you know, that spunky little hatchback that you thought was ridiculously fun to drive, but didn't buy because its interior is straight out of 1995. We assume Toyota won't tolerate that latter part. But signs point that Toyota has regained a pulse and realizes that Americans want fun cars again. This will likely be another one. But as it is, Toyota sells the Yaris that competes in the same segment. And unlike the Mazda2, which is currently only sold in the U.S. as a hatchback, the Toyota Yaris has a sedan version, too.
So why is this happening? For Mazda, it makes sense. After separating from Ford several years ago, it has been trying to find partners to license its fuel-efficient SkyActiv technology to hold down costs and make sure it doesn't turn into the next Suzuki. Toyota, the Goliath that is is, has pounced on the opportunity, as it will open up another cheap venue for North American production, starting in the fiscal year ending March 2014. That means the Mazda2 and the Toyota version coming from Mexico will be sold as 2015 models. Toyota will take just a fraction of the 140,000-unit production capacity that will mostly be allocated to the Mazda2 and Mazda3, cars that need to move from Japanese production to hedge against an overvalued yen. In fact, the Yaris is built in Japan, too, which means this could be more than a charity case from Toyota. But what of the Yaris? Is it going to grow larger? Is Toyota going to stop selling it in the U.S.? What sort of strategy does Toyota see in this agreement? We'll find out soon enough. Source: Toyota