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Toyota, Mazda Choose Alabama as JV Auto Manufacturing Site

Zacks Equity Research

Toyota Motor Corporation TM and Mazda Motor Corporation have announced that they have selected Huntsville, AL as their joint venture (JV) manufacturing site. Total investment of $1.6 billion will be made with equal funding contribution from both the companies.

This recent move will boost the manufacturing capacity of both Toyota and Mazda in the United States. Set to start production in 2021, the new hub will add up to 4,000 jobs.

Prior to this, in August, both Toyota and Mazda had announced plans of setting up an auto manufacturing plant in the country with an annual production capacity of 300,000 vehicles.

Toyota Motor Corp Ltd Ord Price and Consensus

Toyota Motor Corp Ltd Ord Price and Consensus | Toyota Motor Corp Ltd Ord Quote

Focusing on the North American market, Toyota will be independently manufacturing Corolla model at the new plant whereas Mazda will be producing cross-over models for the same target market.

Development of this new plant will enable Mazda to expand its presence, which also demonstrates its commitment to the U.S. market.

Toyota already has an engine plant in Alabama, located at a distance of 14 miles from the new factory. Also, this new place will mark the company’s 11th U.S. manufacturing plant.

Per a recent report by The Wall Street Journal, Toyota and Mazda have been offered a combined incentive of $700 million in order to steer the $1.6-billion factory investment in northern Alabama.

The package includes an approximate $380-million incentive from the state of Alabama while an amount of $320 million has been provided by the city of Huntsville.

This recent development is in line with the U.S. President Donald Trump’s objective to boost auto production in the country.

Price Performance

Shares of Toyota have gained 11% in the last three months, underperforming the 13.3% rise of the industry it belongs to.

Zacks Rank & Key Picks

Toyota carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the auto space are Ford Motor Company F, Volkswagen AG VLKAY and Allison Transmission Holdings, Inc. ALSN, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ford has an expected long-term growth rate of 10.7%. In the last three months, shares of the company have gained 9.2%.

Volkswagen has an expected long-term growth rate of 12.9%. In the last three months, shares of the company have rallied 22.8%.

Allison Transmission has an expected long-term growth rate of 10%. Shares of the company have climbed 19.7% in the last three months.

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