Why Mazda Wants A Chinese Divorce From Ford

Bertel Schmitt
by Bertel Schmitt

Everybody is denying that Mazda’s Chinese joint venture with Ford is quickly coming to an end. The Nikkei is unfazed by the chorus of contradiction. Today’s edition of the Japanese paper sheds more light on the impending divorce in China: Mazda wants “to give itself more latitude to navigate the growing market as it sees fit.” That’s putting it mildly.

In 2003, Mazda had entered a joint venture with China’s FAW. The successful cooperation is on-going. Three years later, Mazda was asked by Ford to join Ford’s joint production venture with Chang’an. Mazda had to split its Chinese operations into two, dividing its attention in the market. Ask the folks at Volkswagen how much fun it is to deal with two joint venture partners in China. Mazda had it even worse. The three-way Ford/Mazda/Chang’an tie-up “often had difficulty agreeing on production plans,” said a Mazda executive to The Nikkei, and he most likely was polite.

Says the Nikkei: “Against this backdrop, Mazda reviewed its China tie-up with Ford, leading to the termination decision.”

China is not only the world’s largest auto market, with around 13.64 million new cars sold. It also has turned into Mazda’s most profitable market. Ending the cumbersome three-way joint venture will give Mazda necessary breathing space, and the ability to implement decisions quickly. For instance, the only car Mazda makes at the joint-venture Nanjing factory is its Demio subcompact, a model that makes Chinese consumers yawn. With the joint venture ending, Mazda could shift the Axela production from a joint-venture plant in Chongqing to Nanjing, boosting capacity utilization.

What Mazda needs are strong partners in strong markets. The Nikkei sees Mazda getting closer with Toyota (Mazda has decided to procure a hybrid system from Toyota.) As for markets, The Nikkei opines: “Seeing that Mazda’s only emerging-market plants are in China and Thailand, it may be wise to explore linking up with a partner in other such countries, where auto demand is growing more rapidly than in developed markets.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
3 of 6 comments
  • Imag Imag on Jan 19, 2010

    I've said this before, but in my opinion, anything that makes Mazda more profitable is good for all of us. No other car company supports enthusiast-level racing so thoroughly or puts out vehicles so oriented to enthusiast values at a reasonable cost. So my best wishes go to Mazda in China. Hopefully it gets them the cash to finish the 16X...

  • PrincipalDan PrincipalDan on Jan 19, 2010

    What a classy little chassis! The cars nice too, the "clown face" is starting to grow on me.

    • Mpresley Mpresley on Jan 19, 2010

      Take a stiff drink, a couple of aspirins, then go to bed early and in the morning you'll feel much better and be thinking straighter. And for god's sake, stop eating at Ronald McDonalds. The Chinese buffet is OK, though.

  • 1995 SC At least you can still get one. There isn't much for Ford folks to be happy about nowadays, but the existence of the Mustang and the fact that the lessons from back in the 90s when Ford tried to kill it and replace it with the then flavor of the day seem to have been learned (the only lessons they seem to remember) are a win not only for Ford folks but for car people in general. One day my Super Coupe will pop its headgaskets (I know it will...I read it on the Internet). I hope I will still be physically up to dropping the supercharged Terminator Cobra motor into it. in all seriousness, The Mustang is a.win for car guys.
  • Lorenzo Heh. The major powers, military or economic, set up these regulators for the smaller countries - the big guys do what they want, and always have. Are the Chinese that unaware?
  • Lorenzo The original 4-Runner, by its very name, promised something different in the future. What happened?
  • Lorenzo At my age, excitement is dangerous. one thing to note: the older models being displayed are more stylish than their current versions, and the old Subaru Forester looks more utilitarian than the current version. I thought the annual model change was dead.
  • Lorenzo Well, it was never an off-roader, much less a military vehicle, so let the people with too much money play make believe.
Next