Why Mazda ups stakes in JV of FAW, not of Chang'an?

Mazda Motor Corp said it had lifted its stake in FAW Mazda Motor Sales to 40 percent from 25 percent for 49.5 million yuan ($7.26 million), but why the Japanese automaker has chosen FAW Mazda but not Chang'an Ford Mazda Auto to raise stakes?

Two reasons can explain for that. First of all, Mazda currently has a limited amount of money at hand after it bought a portion of stakes from Ford at the beginning of this year. Balancing between the two Jvs, we conclude that while Chang'an Ford Mazda boasts a registered capital of $350 million, FAW Mazda only has $14.7 million in books. Thus it makes a lot of sense for Mazda to spend less but get bigger dividends.

on the other side we know Chang'an Ford Mazda is a three-way venture with Chang'an Auto and Ford Motor Co, with Chang'an Auto owning 50 percent, Ford 35 percent and Mazda 15 percent. If Mazda wants to boost investment it would have to get the approval of both Ford and Chang'an Auto. That task may involve too many difficulties.

Yet FAW would be glad to sense Mazda's determination to boost the joint venture business, as it will get larger profit too depending on its controlling stakes. Nevertheless FAW's stake in the venture would fall to 60 percent from 75 percent when the deal completes.