Ford asks to shake up three-way China partnership

Ford Motor Co. and its Asian partners, Mazda Motor Corp. and Changan Automotive Group Co., have asked the Chinese government for permission to restructure their joint venture in Chongqing.

Ford called the partnership "successful," but said all three companies are "constantly assessing new opportunities" to improve its products and meet growing customer demands in China.

None of the three companies would discuss the details of their proposal, but Ford has suggested that it needs all of the Chongqing factory's capacity to meet the rapidly growing demand for its cars in China.

From The Detroit News: http://www.detnews.com/article/20100508/AUTO01/5080309/1148/Ford-asks-to-shake-up-three-way-China-partnership#ixzz0nUHUMmo4

On Wednesday, Ford announced that sales of Ford-Changan vehicles increased 37.6 percent last month over April 2009.

The Chongqing plant could be restructured as a venture between the Dearborn automaker and its Chinese partner, Changan.

Production of the Mazda3, which is produced there, already is slated to move to a factory in Nanjing operated by the trio. Some industry observers in China have suggested that the facility could become a two-way joint venture between Mazda and Changan.

"The proposal is currently under government review, and we are not in a position to make any further comment," Ford said.

For its part, Mazda has been pursuing deeper ties with its other Chinese partner, First Automotive Works, since Ford sold its controlling stake in the company in late 2008. Unlike Changan, which is a regional manufacturer, FAW is one of the country's leading automakers with close ties to the Communist Party.

The Chinese government requires foreign automakers to have a Chinese partner to produce vehicles there.

Analyst Jim Hall of 2953 Analytics LLP said the restructuring could help Ford produce more vehicles in China, but does not address its more fundamental problem: distribution.

"It doesn't give them a dealer network," he said. "Changan has a small dealer network compared to FAW."

Though it no longer controls Mazda, Ford remains its largest shareholder.