Ford Motor Co. (F), along with Mazda and China’s Chongqing Changan Automobile Co., has submitted a joint proposal to the Chinese government to split their three-way joint venture (JV), Changan Ford Mazda.
As reported by Japan’s Nikkei Business Daily on January 17, which Ford dismissed at the time as a rumor, the three automakers will split their three-way tie-up into two entities. They will likely spin out the JV’s factory at Nanjing as a 50-50 JV between Mazda and Changan Automobile Group while Ford and Changan will run the JV’s other factory in Chongqing.
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.
In April, passenger car sales in China rose by a staggering 34%, in contrast to a 20% rise in sales in the U.S. In the first 4 months of 2010, car sales in the country shot up 64% to 4.63 million units. The annual growth is estimated to rise between 15%–20%.
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