MONTGOMERY, Ala. -- Toyota and Mazda will spend $1.6 billion to add factory capacity in a softening U.S. market, but both automakers say the time is exactly right.
Toyota will build the next-generation Corolla and Mazda an unnamed new crossover starting in 2021 at an assembly plant to be constructed just west of Huntsville, Ala.
The factory's combined plant capacity will be 300,000 vehicles a year -- roughly the number of vehicles by which U.S. auto sales declined in 2017.
The two companies detailed the investment here Wednesday in an auditorium full of Alabama elected officials and public service providers, saying the project will create 4,000 factory jobs and enable the automakers to take a new approach to engineering and building vehicles.
The project will be operated as an independent joint venture that has not yet been named, delivering 150,000 Toyota Corollas and 150,000 units of the Mazda crossover.
"We need the Corolla capacity," Toyota Motor North America CEO Jim Lentz told Automotive News during the event. "We sold about 330,000 Corollas last year, and 50,000 in Canada. This plant, with our other Corolla plant in Mississippi, will give us capacity of 310,000.
"So yes, even in this soft market, we need this capacity."
Lentz acknowledged that car sales are declining in the U.S. market. Compact car sales, including the Corolla, fell 5.8 percent in 2017.
But Lentz said the compact car segment is resilient and demand for the Corolla -- Toyota's biggest volume product globally -- remains strong despite the drop in 2017 volume.
Each partner sees the Huntsville project as an opportunity to improve its position in the U.S. market.
Mazda Motor Corp. CEO Masamichi Kogai, who attended Wednesday's announcement here, is hoping to lead Mazda into a product revival starting in 2019, with a portfolio of new vehicle designs and fuel-efficient technologies.
He said that by partnering with Toyota on the plant, Mazda will be able to move ahead but with lower manufacturing costs.
Toyota Motor Corp. President Akio Toyoda, who shared the stage with Kogai , said Toyota is also planning for a new era of advanced products.
The Alabama-built Corolla will be the car's first conversion to what Toyota is calling the Toyota New Global Architecture, a corporate-wide move to more advanced powertrains and lighter vehicles that can be manufactured more easily and updated with greater flexibility.