Report Says Changan, Ford and Mazda May Terminate Chinese Joint Venture

Reports out of China today indicate that Ford, Mazda, and Chongqing Changan Automobile Company are planning to dissolve their three-way joint venture in the country, opting instead for separate joint ventures between Changan and Ford and Changan and Mazda.

Mazda shacked up with Ford and Changan’s joint venture back in 2006 and the three produce Ford Fiesta, Focus, Mondeo, S-Max, Mazda2, Mazda3, Volvo S40, and S80 locally for the Chinese market. The breakup would offer both Ford and Mazda more freedom to plot their strategies in what is now the world’s largest auto market, but the deal is reportedly awaiting approval from the Chinese government.

Though the breakup sounds bad on the surface, it will likely be a boon for everyone involved. In the current three-way tie-up, Changan holds a 50-percent stake while Ford holds 35 percent and Mazda holds just 15 percent. Sources tell Reuters that after the breakup both Ford and Mazda are likely to each form new 50-50 joint ventures with Changan, giving all three automakers more control over the joint ventures and product planning.

Reuters’ report quotes several anonymous sources close to the automakers involved, and neither Ford nor Changan would comment. A spokeswoman for Mazda China, however, confirmed that the automakers are awaiting government approval of a restructuring plan, but would not elaborate.

With a much larger stake in its new joint venture, Mazda looks to be the biggest beneficiary of this plan. As noted earlier, the Chinese auto market eclipsed the United States last year as the largest in the world and looks to hold that title almost indefinitely with 15- to 20-percent annual growth predicted for the next several years at least.

Any changes to the joint venture will have no bearing on Ford’s recent sale of Volvo to another Chinese automaker, Geely. It is likely, though, that the Ford-Changan joint venture will stop producing the Volvo S40 and S80 in China, if it hasn’t already.

Source: Reuters