Mazda assembly at the current three-way JV plant with Ford and Changan

Mazda assembly at the current three-way JV plant with Ford and Changan

 

Ford and its China joint venture partners, Mazda Motor and Chongqing Changan Automobile, have received government approval to end their three-way agreement, a local media report said on Wednesday.

Ford and Mazda will each set up separate 50-50 joint ventures with Changan at the end of this year, the 21st Century Business Herald said, citing an unnamed source.

Ford has reduced its shareholding in Mazda in the last few years and there have been unsourced reports in both Japan and China suggesting that the Japanese automaker wants to pursue a more independent course, particularly with its Chinese JVs.

 

Under a complex arrangement, Mazda cars are assembled, marketed, priced and distributed at wholesale level by the Ford-Mazda-Changan JV but retailed by a separate JV with China's First Auto Works called FAW Mazda Motor Sales.

That separate JV was forced to suspend output and sales of the locally assembled 3 for over nine months in 2006/7 after what local reports at the time described as "a flaw in the process of acquiring government approval for the model's production and sale".

Foreign-brand cars produced in China are normally sold through the makers' own sales channels but Mazda initially gained approval to form the separate FAW Mazda Motor Sales venture which initially had exclusive rights to sell all Mazda-branded cars in China.

After the suspension, 3 sales resumed under a revised framework with distribution rights — including marketing and pricing decisions — assigned to assembler Changan Ford Mazda with only retail activities assigned to FAW Mazda Motor Sales.

 

A Ford spokeswoman told Reuters today's report was only speculation, while a Mazda spokeswoman said she had no knowledge of the matter. Changan executives could not be reached for comment.

The news agency noted that the future of the Changan-Ford-Mazda partnership had been in focus since Ford cut its controlling one-third stake in Mazda in 2008 to free up cash.

The partners had submitted a proposal to the Chinese government earlier this year to split the tie-up into two separate ventures, unnamed sources said.

Ford and Changan currently own 35 percent and 50 percent of the venture, respectively, with Mazda holding just 15%.

 

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