Toyota Motor Corp. and Mazda Motor Corp. were offered at least $700 million in combined incentives to steer a $1.6 billion new factory investment to northern Alabama.
The package, disclosed Thursday by various officials, includes a $379.9 million incentive from the state of Alabama and $320 million from the city of Huntsville, where the plant will be based. The two Japanese auto makers evaluated several states in 2017 for the project, which is expected to create 4,000 jobs and make up to 300,000 vehicles a year by 2021.
Tax and other incentives have come to play a major role in luring companies to hire and invest in various regions of the U.S. Toyota already has major parts-making operations in Alabama and builds cars in several U.S. assembly plants, while Mazda’s U.S. presence is mostly confined to selling cars.
During a press conference Wednesday staged to announce details of the investment, Toyota President Akio Toyoda said Alabama officials helped lay the groundwork for “another made-in-America success story.” It is unclear if the entirety of the financial-incentive package has been disclosed.
The state’s package includes a $210 million investment credit along with a $20 million training facility to recruit and train workers, according to the Alabama Chamber of Commerce. Huntsville’s deal is a combination of direct and indirect incentives based on public comments, including a 20-year property tax abatement worth $107 million.
The package was approved by Huntsville City Council Thursday evening.
Toyota and Mazda first said they planned to build a plant in the U.S. last summer, helping tamp down President Donald Trump’s criticism of foreign manufacturers importing cars from Asia or Mexico. Toyota aims to build 150,000 Corolla models and Mazda will use the rest of the capacity for an unspecified model.
“This is generational project,” said Huntsville Mayor Tommy Battle at a city council meeting Thursday. “This is one of those slam dunk deals if there ever was one. As long as the investment is made, money will come back to our investment.”
Mr. Battle said he expects a $5.6 billion return on investment over the next 20 years.
Toyota already has a relationship with the city of Huntsville. Toyota has an engine plant in the city, which currently produces four-cylinder, V-6 and V-8 engines, and is its largest engine plant in the world.
Alabama is also home to three other vehicle assembly plants operated by foreign auto makers: Daimler AG’s Mercedes-Benz unit, Honda Motor Co. and Hyundai Motor Co. In September, Daimler said it would invest $1 billion at its Alabama facilities on top of the $5.8 billion it has spent in the state since it began vehicle production there in 1997.
Toyota and Mazda’s plan to build the new plant set off a race among at least 11 states to woo the companies. The shortlist included Alabama, North Carolina and several other states with existing Toyota facilities.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com
