Ford Gets Approval for JV Split – Analyst Blog

Ford Motor Co. (F), Mazda Motor Corp. and China’s Chongqing Changan Automobile Co. have received approval from the Chinese government to split their three-way joint venture (JV), Changan Ford Mazda.

 

Ford and Mazda will each form a separate 50:50 JV with Chongqing Changan Automobile Co. by the end of this year. They will likely spin out the JV’s factory at Nanjing as a 50-50 JV between Mazda and Changan while Ford and will run the JV’s other factory in Chongqing with Changan.

 

Ford owns a 35% stake in Changan Ford Mazda, with Changan holding 50% and Mazda the remaining 15%. The venture has posted a staggering 55% rise in sales to 316,139 vehicles in 2009, driven by the Chinese government’s incentives to push auto sales.

 

Ford severed its ties with Mazda in 2008 by reducing its 33% stake in the latter to 13%. The automaker currently holds about 11% in Mazda.

 

Mazda is likely to benefit from the split due to its increasing stake in the new venture with Ford. Japan’s fifth largest automaker would have a greater exposure to the Chinese automotive industry, which outperformed the U.S. as the world’s top auto market in 2009.

 

Last month, sales at Changan Ford Mazda dipped 6.3% on a year-over-year basis. Meanwhile, sales at China went up 13.6% to 946,200 cars, vans and sport utility vehicles during the month.