Automotive giants, Toyota and Mazda have entered into a deal in which Mazda will manufacture a small car for the Toyota brand from an upcoming factory in Mexico.

The two companies said on Friday that the new car will be based on Mazda2 and will be sold by Mazda mostly in North America. The production is expected to begin by the summer of 2015 and Mazda will produce around 50,000 cars a year for its partner.

Mazda has been facing problems to operate and expand its presence in the US market. It recently had to withdraw from the Flat Rock venture in Michigan where it was manufacturing cars in collaboration with Ford Motor for more than two decades. Mazda is now planning to produce around 140,000 Mazda2 Demio and Mazda3 Axela small cars in Mexico.

On the other hand, Toyota is consolidating its position in the American market following a series of setbacks and natural disasters. The company has 14 assembly and components plants in North America and it produces Toyota Camry sedans at a Subaru plant in Indiana owned by Fuji Heavy Industries.

Analysts say that the joining of forces between the two companies offer good prospects to both but is more favorable to Mazda, which is the smaller of the two firms.