TOYOTA CITY, JAPAN – Toyota and Mazda announced an agreement where Mazda will produce a Toyota-brand subcompact vehicle, based on the Mazda2, at a plant in Mexico that Mazda is currently building. The companies plan to start production of the subcompact in the summer of 2015, with 50,000 units planned annually, and to sell the vehicle in the U.S., and elsewhere in North America, through Toyota dealerships.

Toyota plans to pay for part of the production equipment and development costs of the Toyota vehicle, as well as costs related to the plant's increase in production capacity.

The automakers stated their goals for the project, with Toyota working to strengthen its North American vehicle lineup, and Mazda working to increase production efficiency and improve profitability.