By on December 15, 2009

The very model of a modern major alliance

“We’re still dependent on each other,” Ford’s head of global product development Derrick Kuzak tells the Detroit News, dispelling rumors that Ford and Mazda are going their separate ways. “You cannot change that overnight.” According to Kuzak, many of Ford’s most important vehicles continue to be based off of Mazda platforms. Ford Chief Financial Officer Lewis Booth adds,

The strategic relationship continues. The business relationships continue. And they continue on the basis that they’ve always continued. Where it works to the benefit of both companies, we do things together, and where it doesn’t, we don’t.

Booth explains that, though in the past Ford was more dependent on Mazda, “now, it’s a little more two-way than it was. There’s more mutual sharing.” So why has Ford reduced its stake in Mazda over the last several years? Booth claims that the move was motivated more by Ford’s financial position than any dissatisfaction with the oldest alliance in the auto business. Mazda’s financial weakness now makes it more dependent on Ford than it had been, as analysts claim the Japanese firm is too small to be a true volume manufacturer but too large to be a niche brand. And besides engine and platform-sharing, the two firms operate joint ventures in China, Thailand, and South Africa.

And Chinese-market cooperation is being forced into the foreground of discussions between the two firms. The sale of the Volvo brand to Geely complicates the Changan Ford Mazda venture, as the 35 percent Ford, 15 percent Mazda and 50 percent Changan-owned venture currently builds Volvo-branded vehicles for the Chinese market. In addition to figuring out how to work that production out of Changan, Ford is seeking to improve the venture’s performance, as the Blue Oval’s Chinese efforts currently haul in a mere two percent of the crucial Chinese market. Work is under way on a plant expansion that would boost Changan Ford Mazda’s production to 600k units annually, nearly double what the number sold by the venture this year. As Ford and Mazda feel their way through their evolving relationship, Chinese market strategy should take on an increasingly important role.

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3 Comments on “Ford And Mazda: Still Happy Together...”

  • avatar

    Many of us tried to explain that the alliance was still there, that the entanglement was deep.
    The real question is WHY did Ford sell the shares for so little?
    I believe, I do not know, that it was between Mazda and Ford.
    Sort of within family unspoken deal.
    This both knowing the real partnership was no cemented and the future still held a deep commitment between the two.

    • 0 avatar

      They were sold for so little 1. because ford’s ownership stake % required Ford to carry Mazda’s gain/loss (losses recently) and assets/liabilities (debt) on thier balance sheet and that has an impact on Ford’s credit rating and ability to borrow for Ford Motor credit. 2.  for the reason given above (using internal cash instead of debt to purchase shares) knowing that Mazda was going to do a tender offer to raise funds for R&D development (which helps both), if Ford wanted to hold on to it’s controlling stake it would have blocked that issue.

      And yes it was obvious they would work together in addition to the factories listed above they also share an indian factory as well as share several NA factories. 

      I wonder if the drag out over volvo is ford deciding whether they really want to sell the whole thing or hold onto a position similar to mazda and the three continue to develop together.

  • avatar

    “…and it gets both Ford and Mazda some more news coverage that isn’t all negative…”

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