Cars
Mazda's winding path
By Han Tianyang (China Daily)
Updated: 2010-05-10 10:29
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Mazda cars are popular among Chinese customers, but the automaker has to solve some thorny problems in relations with its several partners in China.[China Daily] |
Possible split of three-way partnership latest challenge for Japanese brand
Beijing: When Chang'an Ford Mazda Automobile Co suspended production of the Mazda 3 subcompact at its plant in Chongqing last month, industry observers saw it as a sign the three-way venture is breaking apart.
In a complex arrangement between Ford Motor Co, Mazda Motor Corp and China's Chongqing Chang'an Automotive Co, the tie-up has plants in the southwestern city of Chongqing and Nanjing in the east.
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A source from Mazda's China operation told China Daily that production of the Mazda 3 will be resumed later this month - but at the Nanjing plant. He said the transfer aims to ease pressure on its Chongqing plant, which has an annual production capacity of 270,000 units.
The Nanjing plant has a capacity of 160,000 cars a year, but has not been fully utilized.
The joint venture began construction on another plant in Chongqing last year that is scheduled for completion by the end of 2011 that will have an initial production capacity of 150,000 units a year.
The source at Mazda declined to comment on whether the halt in production on the Mazda 3 is related to a reported planned separation of the three-way partnership.
New joint venture
According to a recent report in the China Business Journal, Mazda's China chief Noriaki Yamada confirmed during the Beijing auto show that the partners are talking about the possibility of Mazda and Chang'an establishing another joint venture.
He said the required applications have been submitted and are awaiting approval by the Chinese government.
Mazda now holds only a 15 percent stake in the venture, while Ford owns 35 percent and Chang'an has 50 percent.
The recent production suspension is not the first sign of weakened relations between Mazda and Ford. The US automaker reduced its one-third stake in global Mazda operations to 13 percent in 2008 and then to 11 percent last year.
A source with Chang'an told China Business News that the reported split would not affect Chang'an, but the three-way structure did constrain development of the Mazda brand in China.
Mazda sold 68,259 vehicles in China in the first four months, up 35 percent over a year ago. It aims to move 220,000 cars this year.
Yet its Japanese counterparts Toyota, Honda and Nissan all posted sales in excess of 500,000 vehicles in China last year.
Uneven development
As one of the earliest arrivals in China among foreign automakers, Mazda has been in the country for almost two decades, but its development has been troubled.
It first started local production using a technical licensing agreement in 1992 at a plant in south China's Hainan province. After the facility was acquired by FAW Group in 1998, Mazda began making cars with FAW under license.
In 2005, the two formed a joint sales company - FAW Mazda Motor Sales Co.
In February 2006, the first Mazda 3 rolled off the production line at the plant in Chongqing, which at that time was operated jointly by Ford - then the majority stakeholder in Mazda - and Chang'an.
Yet just a month later, the company had to halt production of the Mazda 3 because the model was sold through FAW Mazda Motor Sales Co and the separation of manufacturing and sales violated China's auto industry policy.
As a popular compact model, the Mazda 3 also had the potential to be a sales boost that both FAW and Chang'an wanted.
In April that year, Mazda was required by Ford to buy a 15 percent stake in the US automaker's venture with Chang'an. The company was renamed Chang'an Ford Mazda.
Production of the Mazda 3 resumed in October that year after its sales operations were moved to the Chang'an venture .
Mazda currently has 268 dealers under its two joint ventures in China. It aims to surpass 300 outlets by the end of the year.
