Here’s the scenario: Mazda is a small global player lacking the scale and resources to compete in an incredibly expensive, incredibly tough global auto market. Its production is currently way, way too Japan-centric (that’s a problem because of the strong yen and high costs). It needs more non-Japan production, so it is building a new plant in North America, in Mexico, in a plant was designed to produce 140,000 vehicles per year, which is below the typical threshold for profitability.
Meanwhile, Toyota is also looking for more production capacity in North America to escape the strong yen. Because it requires a major investment to build a new greenfield plant when it doesn’t need an entire plant’s worth of capacity. Toyota also wants to broaden its model lineup. The solution?