Cars

Mazda may set up new JV with FAW

(Shanghai Daily)
Updated: 2010-05-19 09:55

Mazda Motor may set up a new joint venture with Chinese partner FAW Group Corp to boost sales and expand its market share in China as its minor role in a partnership slowed its expansion in the world's largest auto market, according to media reports.

"The two auto makers are in discussions to deepen their cooperation, possibly a joint venture to be set up in the future," National Business Daily reported yesterday, quoting an unnamed source.

The proposed new venture underscores Mazda's efforts to boost its sales and share of the rapidly expanding vehicle market in China.

Mazda declined to comment on the report yesterday.

Related readings:  Mazda's winding path  Mazda partnership 'on the cards'  FAW Group sets 2010 sales target at 2.3m units  24-hour auto factories still can't meet demand

Mazda, Japan's fifth-largest car maker, entered the Chinese market in 2003 when it started making the Mazda 6 through a technical cooperation with the FAW Group.

"The Mazda 6 has enjoyed very good sales but cooperating technically limited profit for Mazda," said Xu Caihua, an analyst at Guodu Securities Co. "The new joint venture will allow Mazda to be more flexible and accelerate its development in China."

Mazda blamed its minor role in the partnership for restricting its development in China in the past few years.

Mazda also has a venture with Ford Motor and Chongqing Changan Automobile Co, in which it holds a 15 percent stake. It is also reported that the Japanese auto maker is seeking to split the three-way tie-up and instead form a 50-50 joint venture with Changan. The move is highly anticipated after Ford cut its stake in Mazda globally.

Insiders said that a restructuring proposal has been submitted to the government that seeks to improve the efficiency of Mazda's venture and strengthen its Chinese business.