BloombergTOKYO (Bloomberg) — Toyota Motor Corp. agreed to buy a stake in Mazda Motor Corp. and jointly build a $1.6 billion plant in the U.S. Asia’s largest automaker will also invest more in areas like self-driving cars to stay relevant in an industry upended by technological changes.
As new rivals emerge and cars become autonomous and connected, Toyota will adapt to the change with its new plans. Mergers and acquisitions and using robots to do routine tasks such as making reports and answering queries is one part of it. Toyota will increase the proportion of R&D spending on “crucial fields” including artificial intelligence and environmentally friendly vehicles to as much as 25 percent from about 20 percent.
“I can’t say how far it’ll expand, because honestly I don’t know. But that it’s come this far means that I don’t imagine it’ll stop here,” said Senior Managing Officer Nobuhiko Murakami, referring to the company’s investments into new technology. “The reality is that if we don’t shift further in that direction, we won’t survive the upcoming competition. We have a real sense of crisis about this.”
Within minutes of the first-quarter earnings conference ending, Toyota confirmed it will acquire about a 5 percent stake in Mazda and together they will spend $1.6 billion to build a U.S. auto plant.
Trump hails factory plan
Automakers are now facing competitors such as Google, Apple Inc. and Amazon.com Inc., Toyota President Akio Toyoda said at a press conference in Tokyo. The new companies are challenging the traditional automakers to improve future mobility, he said. Automakers can’t create that future on their own and it’s becoming increasingly important for carmakers to seek partners without viewing it from a confrontational perspective, he said.
“In the future, there will be artificial intelligence, autonomous driving and various environmentally friendly vehicles that we have to prepare for, and new competitors from emerging markets and IT companies like Apple and Google,” Toyoda said. “There are no nautical charts for us to follow.”
U.S. President Donald Trump cheered Toyota and Mazda’s planned factory, the first new U.S. vehicle assembly plant announced since he took office. He called it “a great investment in American manufacturing” in a Friday morning tweet.
Earlier this year, Trump took credit for Toyota investing $1.33 billion in an existing U.S. factory, championing spending by a Japanese automaker he blasted in January for building a plant in Mexico.
Toyota’s presence in the U.S. has steadily increased over the decades. From a company that imported all its vehicles from Japan, Toyota has transformed into a company building 70 percent in North America, its North America Chief Executive Officer Jim Lentz said.