Production of the Mazda 3 compact car in China was still suspended after two months pending government approval, and its shares sank after a newspaper report of broader roadblocks to its China strategy, Reuters reported.
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The news agency said the automaker had voluntarily stopped producing the 3 (known as the Axela in Japan) at a Chinese joint venture on 7 April after just six weeks, citing a flaw in the process of acquiring government approval for the model’s production and sale.
A Mazda spokesman told Reuters authorities had reviewed the originally submitted documents and had notified the venture that the part of the application covering selling the 3 through a sales network operated by another local joint venture was incomplete.
The three-way manufacturing venture with Ford and Changan Automotive Group had re-submitted the application and was hoping for imminent approval, he said.
According to Reuters, Japanese business daily Nihon Keizai reported, however, that the Chinese government wanted Mazda to rethink its strategy of selling all Mazda-badged cars through one company. It cited a source close to Changan Automotive as saying that authorities had disapproved of the separation of manufacturing and distribution, which it requires at other foreign ventures.
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By GlobalDataThe news agency added that, after years of difficult negotiations with authorities, Mazda had gained approval early last year to form a sales joint venture in China with local partner FAW Car and its parent, First Automotive Works (FAW), that would have exclusive rights to sell all Mazda-branded cars in China.
The sales company began operations soon after, selling the 6, manufactured at partner FAW’s plant, and the imported RX-8 sports car. The company had also sold the 3 for a brief period after production at the Changan-Ford-Mazda plant began in February this year, the news agency said.
Reuters added that Mazda had made much of the approval for the exclusive sales company, calling it the first of its kind and a crucial step in building its brand in China and achieving its sales target of 300,000 units annually by 2010.
Most foreign carmakers have two distinct joint venture partners in China, and vehicles produced by the companies must be sold through their own sales channels, the report said.
According to Reuters, Mazda said it was sticking to its sales target of 20,000 3s this year, and of growth of at least 10% in its total Chinese sales for 2006 from 133,778 units last year.
