Create a free account to continue

Mazda To Build Plant In Mexico

Announcement comes less than two weeks after it decided to stop building Mazda6 sedan in U.S., raising questions about the future of a U.S. factory.

DETROIT (AP) -- Mazda Motor Co. said Friday that it will build engine and vehicle assembly plants in Mexico to make small cars.

The plants, to be built in Salamanca city, Guanajuato state, north of Mexico City, will be built in an alliance with trading company Sumitomo Corp. They will manufacture the Mazda2 subcompact and Mazda3 compact, primarily for Central and South America, the company said.

The factory complex is aimed at increasing Mazda's presence in Brazil, which has become the world's fourth-largest auto market after China, the United States and Japan, the company said.

Mazda's announcement comes less than two weeks after it decided to stop building the midsize Mazda6 sedan in the U.S., raising questions about the future of a U.S. factory that it runs jointly with Ford Motor Co.

The Japanese automaker said June 6 that it will continue building the Mazda6 at the factory in Flat Rock, Michigan, near Detroit, until the end of the current model's life cycle. But the next version of the car will be built at Mazda's Hofu plant in Japan, the company said.

A company spokesman wouldn't say when U.S. production would stop, nor would he say whether Mazda would pull out of the joint venture, called Auto Alliance International.

Mazda said its sales have improved in Mexico since entering the market in October of 2005, and last year it set records for sales volume and market share.

The $500 million factory complex in Mexico is scheduled to open sometime after April 2013 and have an annual production capacity of 140,000 vehicles. It will employ about 3,000 people when at full capacity.

Mazda also said it will start a Brazilian sales company sometime between April of next year and March of 2013, selling vehicles produced in Japan until the Mexican plant starts operating.

Mazda will own 70 percent of the factory complex and the Brazilian sales company, while Sumitomo will own 30 percent, the statement said.

The partnership announcement comes as Ford continues to cut its stake in Mazda. Ford bought 25 percent of the struggling Japanese carmaker in 1979, raising it to 33.4 percent in 1996. But Ford began cutting ties in 2008, when it was trying to cut brands and costs. Last year, Ford lowered its ownership to 3.5 percent.

More in Operations