Ford, Mazda China JV Nearing End

Ford’s joint-venture with Mazda and Chongqing Changan Automobile is drawing to a close in China, with final government approval green-lighting the breakup expected shortly, a top Ford executive says.

The U.S. auto maker currently controls 35% of Changan Ford Mazda, while Changan holds 50% and Mazda has 15%. Once the split is approved, Ford plans to take a 50% stake in a new JV with Changan, dependent on the government’s nod, says Joe Hinrichs, president of Ford Asia-Pacific and Africa.

Fifteen new products coming to China by 2015, Hinrichs says.

“Going forward, that will be our investment in the passenger-car (segment) in China,” he says in a J.P. Morgan Auto conference call today.

Details of the new arrangements have not been announced officially, but Chinese media reports indicate Ford and Changan will continue manufacturing in the southwest city of Chongqing, while Mazda and Changan form a new partnership and produce cars in the eastern city of Nanjing.

Chongqing, not as industrialized as Nanjing, would fit into the plans outlined by Hinrichs calling for greater penetration of Ford brands in Tier 2 and 3 cities, where most future growth is projected to occur.

The move does not necessarily portend the end of the long-time relationship between Ford and Mazda, although Ford last year trimmed its stake in the Japanese auto maker from 11% to 3.5%.

Kiyoshi Fujiwara, Mazda executive officer-product planning and powertrain development, recently told Ward’s Ford and Mazda were on diverging paths, but that didn’t mean their paths wouldn’t cross again in the future.

“We want to maintain a relationship with Ford, but on the business side we have different situations,” he said at the time. “We have to be something distinctive, but Ford is normally mass market. Therefore, we have to adjust our relationship.”

Ford’s new arrangement in China should help it continue with aggressive growth plans calling for 15 new vehicles to be introduced in the market by 2015.

While all of the vehicles will be based on global Ford architectures, there may be China-specific models, Hinrichs says.

“China is becoming so large that the market possibly could support unique top-hats,” he says, noting as an example the C-segment, alone, is projected to account for more than 5 million units by 2015.

“That segment will be bigger than almost Japan’s entire market, so we see potential to have multiple products off global platforms,” Hinrichs says. “We may have multiple products in the same market but pick and choose where they go.”

In China, as well as in India where Ford plans to launch five new nameplates by 2015, Hinrichs says Ford is conducting ongoing consumer workshops during the product-development process to gauge specific regional tastes and will “make minor changes” accordingly.

The Ford chief is unfazed by the recent sales slowdown in the Chinese market, largely caused by inflation, he says.

The 18 million-unit market still is growing, albeit at a slower pace than last year. But should current demand begin to falter, Hinrichs expects the government to step in with policies to spur expansion.

“The auto industry is a very important part of (China’s) economic growth,” he says.

Separately, Hinrichs says it is unlikely Ford will follow General Motors anytime soon in creating a China-only brand. GM recently launched the Baojun nameplate with partner Shanghai Auto.

“We studied (that possibility) with our partners, but right now there is no plan (to create a new brand),” he says. “But it’s something we’re studying, and we’ll adapt to what’s happening in the marketplace.

“The greatest potential we see right now is in the Ford brand, itself, and expanding our product offerings to touch more segments.”

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