Mazda will build an as yet unnamed small car for Toyota at a Mazda factory now under construction in Mexico. The car will be based on the subcompact Mazda Mazda2, which also shares its platform with the Ford Fiesta. The Mazda2 is currently being built in Mazda’s Hiroshima and Hofu assembly plants.
The forthcoming Mazda factory is being built in Salamanca, in central Mexico, was said to “mainly” serve the Central and South American markets when the announcement was made in 2011, and would build both the Mazda2 and the compact Mazda3 sedan. Both models are sold in the U.S., although Mazda didn’t say whether the new cars built in Mexico will also be sold here.
The Mazda2 currently competes against Toyota’s subcompact, the Toyota Yaris (here and here). The Yaris has generally been praised by the automotive press, though sales have been disappointing for a car company typically leading or a strong contender in the markets in which it competes. The Toyota Corolla, for example, is a top seller in the compact class, despite being an aging design. A new Corolla is due in 2013.
Although Toyota hasn’t announced that the new subcompact will replace the Yaris, it would seem likely. The dollar has fallen significantly against the yen in the past four years, going from about 100 yen to the dollar to 80 yen, placing the Japan-built Yaris at a disadvantage cost wise, because of the change in exchange rate. By building the new subcompact in Mexico, Toyota would be able to take advantage of the North America Free Trade Agreement, and would not have the problems caused by the falling dollar.
Furthermore, the new Toyota subcompact will start production “around the summer of 2015.” Toyota’s typical product cycle is about seven years, and with the current generation of Yaris (all-new in 2007, when it entered the U.S. market), the Yaris will be ripe for replacement.
The likelihood of the new Toyota subcompact replacing the Yaris, rather than perhaps being a new Scion model, is increased by Toyota’s announcement that the model will be sold through Toyota dealerships.
It’s not uncommon for carmakers to share platforms, product or plants. For example, the new Scion FR-S sports coupe (here and here and here) is almost identical to the Subaru BRZ and is being manufactured in a Mazda facility in Japan. In addition to Toyota’s plant in Kentucky, the Toyota Camry is also built at an Indiana factory operated by Subaru.
The advantage for Mazda, of course, is increasing the use of its new factory in Mexico. The new subcompact will be produced at an annual rate of 50,000 units per year, according to Toyota, a significant boon for Mazda.
Other than saying that the new Toyota subcompact will be based on the new Mazda2, Toyota did not say how closely, whether almost identical like the Scion FR-S and Subaru BRZ or substantially different, like the Ford Fiesta and Mazda2, which each has its own body and corporate powertrain.