By on January 17, 2010

Axela-break. Picture courtesy

Divorce Sunday: Mazda and Ford will dissolve their joint venture partnership in China by 2012, The Nikkei [sub] writes.

The Chang’an Ford Mazda Automobile Co. has been producing cars since 2006. The JV is 50 percent owned by Chang’an, 35 percent by Ford and 15 percent by Mazda.

The joint venture has two plants, one in Chongqing and the other in Nanjing. And that’s how they’ll divide the property: The Nanjing business will become a 50-50 unit of Mazda and Chang’an. The Chongqing operations will be a joint unit of Ford and Chang’an. Mazda’s Axela, which is currently made in Chongqing, will be made in Nanjing. The Nanjing plant has annual output capacity of 160,000 units; which Mazda wants to expand to 200,000 units.

Stating the obvious, the Nikkei says: “The planned move, coming on the heels of Ford unloading some of its Mazda stock in 2008, will further weaken ties between the two automakers.”

Soon, there will be another decision to be made. What happens with the Volvo/Chang’an joint venture when Volvo is owned by Geely? Chang’an Ford Mazda produces the Volvo S40 and the Volvo S80. With the JV dissolved, what will happen to the cars? Says Shanghai Daily: “To complicate things, Volvo’s current OEM arrangement with Chang An Automobile needs to be bought out, and the relationship with its existing sales network of 4S stores needs to be straightened out. Chang’an’s OEM contracts for Volvo S40 and S80 are not going to expire until 2015 and 2018, respectively.”

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16 Comments on “Mazda And Ford Divorce In China...”

  • avatar

    One has to wonder which of those two plants will end up being more successful in China and if Ford didn’t sell it’s soul to survive the recession…only to temporarily delay it’s eventual demise.

    • 0 avatar

      Assuming China’s astounding growth rate is sustainable, and that all current and future Ford-badged C1 and EuCD platform-based vehicles can seamlessly be produced on the same line, then disentangling Ford and Mazda production should not be cataclysmic event that some might think it will be.

      Joint production proceeded because a) economies of scale were needed for 3 brands which had too little volume to go it alone, and b) it was a no brainer for the common owner to address the opportunity by pooling resources.

      The greatest risk to the separation arrangement is if Chinese automotive market sales growth slows after these plants either expand to produce more of the current portfolio, or to add new products, and a) investment is not recovered as originally forecast, or b) if a Chinese recession occurs, the plant utilization rate falls below a break-even level.

      Hi Bertel, Any word on what happens to the JV engine plant CFME (I think it is called – as opposed to the JV body and assy plant CFMA9?

    • 0 avatar

      Hi Bertel, Any word on what happens to the JV engine plant CFME (I think it is called – as opposed to the JV body and assy plant CFMA9?
      Keine Ahnung.

  • avatar
    Dr Strangelove

    Is it just me, or does anyone else have trouble understanding what the advantage is for Ford to cut Mazda lose? I thought the models that they developed jointly did rather well.
    Similarly, Volvo seems to be a much more credible near-luxury brand than Lincoln. I don’t get why Ford is in such a hurry to dump them either – probably all it would take to make Volvo “profitable” would be to lean on the Swedish govt and the unions, using the sale to China as a bargaining chip.

    • 0 avatar

      I believe in China, Lincoln would be a  more desireable luxury brand than Volvo.  Sales figures will prove me right or wrong.

      No, i don’t see the logic in cutting Mazda loose – especially when ford’s stock (my stock) is rising so nicely.

      • 0 avatar

        Seems like Lincoln would do well in China if reports are true that wealthy Chinese prefer to be chauffeured.  Which begs the question why Ford hasn’t made that push.  Perhaps it’s because the Chinese have a very real difficulty pronouncing the letter “L?”  Why stake an international expansion of Lincoln when a majority of that effort requires inventing an alternative moniker.  Kind of defeats the purpose.  Might as well sell the Lincoln MKT Town Car, for example, as the “Ford Town Car” in China.

    • 0 avatar

      The reason Ford is getting rid of Volvo is because Volvo loses money hand over fist.  Money that Ford no longer has to lose, so they are kicking Volvo out. 

      Ford never decontented Lincoln for Volvo or PAG at all, they Euro brands were priced far above Lincoln to begin with.  Lincoln has simply had the same chintzy, uncompetitive cars it’s always had.  Even today.  Ford has never made a huge and serious investment in Lincoln as GM has in Cadillac. 

      Lincoln also doesn’t enjoy the same brand recognition or image Cadillac does either.

    • 0 avatar

      While Cadillac may have a slightly better public perception compared to Lincoln at the moment, almost all of that is due to the CTS, which is a fairly recent development.  Lincoln was regarded nicer than Cadillac for quite a while through the 80s and 90s when the Town Car was head and shoulders above the DeVille.  The Mark series of cars were also quite a bit nicer and more well received than Caddy’s El Dorados, and Lincoln was heads and tails above Cadillac in perception with the introduction of the Navigator (before Caddy caught up with the Escalade).
      When Ford has ownership of the PAG brands, that technology could have easily been infused into Lincoln if Ford had wanted to make a push for it.  As it was we got a shared platform that resulted in the LS, S-Type, and Thunderbird, and even though the LS was far from perfect, it was reviewed well, and could have become a great car, Lincoln’s CTS before the CTS was made, if the money and time had been invested to improve and perfect it.  Building the Aviator off of a Range Rover instead of an Explorer, moving the Town Car to a lightweight aluminum body like the XJ, and creating a Mark IX based on any of Aston Martin’s cars were all moves that could have been made, and would have helped Lincoln’s image greatly, but for whatever reason Lincoln was relegated to red-headed stepchild status and left out in the cold.
      Also, the current lineup is hardly chintzy or uncompetitive.  The brand is certainly damaged, and has to slowly build itself back up.  Building a Lexus and Acura fighters that offer more content and features for less money with comparable quality with minimal investment may not be a sexy move, but it might be the smartest move at the moment.

    • 0 avatar

      I expect Ford cut Mazda loose to free up some cash, and to focus on the core Ford brand (“one Ford”).

      Ford has some pretty decent platforms and technologies and has the ability to continue to develop them in house, so I’m not sure what Mazda would have brought to the table going forward – unless Ford wants to bring a rotary powered Focus to market.

      I’m a little worried about Mazda’s ability to go it alone.  They are a small automaker that doesn’t really have the resources to develop competitive platforms on their own – plus the whole Japan debacle will likely knock them back a peg.  Hopefully they can find a partner, as the demise of Mazda would cut of the supply of MX-5s and RX-8s at the source.  Any automaker that makes interesting products deserves to stick around IMHO…

  • avatar

    Ford relied on Mazda for certain elements of platform engineering, and help in development of small displacement engines.  Now that Ford is globalizing almost  all vehicles lines, it has less of a need for Mazda as Ford of Europe already has a wealth of experience in small displacement engines, and has a great track record for developing platforms that lead to fun to drive cars.
    As far as Volvo goes, the big problem with the PAG is that to make room for Aston, Jaguar, Volvo, et al, Ford had to decontent Lincoln so that its own brands wouldn’t be fighting each other.  Lincoln has more history and is more identified with Ford than Volvo is, so if one has to go, it makes sense that it is Volvo.  Now that Volvo is unloaded though, Ford can really start to focus on Lincoln as a true luxury brand and bring it back up to and above the level of Cadillac, Lexus, etc, like it was before.

    • 0 avatar
      Dr Strangelove

      I agree that Ford can manage to develop cars on its own. However, Mazda is a good company and has a presence in Japan, which Ford doesn’t,  so the cooperation provides a bigger market to amortize the costs of development. Similarly, Lincoln, like Cadillac, may work in NA but unlike Volvo doesn’t work in Europe.
      Fiat’s Marchionne wants to hitch up with anyone who he can grab by the coat tails, dead or alive, just  to gain scale, while Ford is ditching perfectly viable brands to focus on its  “One Ford” strategy. I think it’s a “burning the boats” strategy and ill-advised.

  • avatar

    Given the forward thinking of Mulally I wouldn’t be surprised that this will be another bold move. Don’t forget that the Chinese gov’t wants to remove brands and companies like crazy, leaving only 8 from the 100 right now.
    They might dump Chang’an altogether.

    Bertel, do you know how many JV’s Ford is into in China?

  • avatar

    While I agree that Ford is better off with Mazda and Volvo attached to the hip, it seems that Mazda is planning for a life independent of any umbilical cords. Of course, I don’t understand why Mazda would transfer to the China plant that’s not making the Axela –or why Ford would agree to that as well. Unless that current plant is not capable of further expansion?

  • avatar

    I think the Lincoln vs. Volvo question for China depends on how nationalistic and pro-American the Chinese really are, which of course is the ten trillion dollar question.  You would think that the young, urban Chinese would prefer Volvos, but I can’t put numbers to that.

  • avatar
    Kyle Schellenberg

    Times a’ Chang’an.

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