Changan attempts to appease Changhe, as Changan Mazda's production fate is left undecided

Gasgoo.com (Shanghai February 3) - In order to patch up the recent rift with Changhe Automobile, Changan has promised to increase funding for the Jiangxi-based manufacturer and help it introduce more models, the Beijing Times reported today. At the heart of the issue is the fate of Changhe Suzuki's production rights and the new Changan Mazda joint venture.

According to sources from Changhe, Changan had originally decided to transfer production rights for Changhe Suzuki vehicles to Changan Mazda in order to aid in the latter's quest to independently manufacture vehicles in China. The government, for its part, has been worrying about excess inventory in the automobile industry, with the National Development and Reform Commission currently less willing to authorize new production programs.

Therefore, transferring Changhe Suzuki's production rights would help Changan decrease its number of production programs (Changhe currently has two such programs in the forms of Changhe Automobile and Changhe Suzuki), aiding the manufacturer's quest to apply for an independent production program for the Changan Mazda venture, which Changan deems necessary following the breakup of the Changan Ford Mazda JV.

Although Changhe was eventually able to maintain production rights for Changhe Suzuki, the disagreement caused tensions between both sides to rise, with several high-level Changhe managerial staff resigning earlier this week. However, Changan Board Chairman Xu Liuping was adamant that the disputes had not affected Changan's expansion plans whatsoever, and that he would continue pushing for further cooperation between the two companies.

However, due to the recent conflict, Mr. Xu said that he is concerned about Changan Mazda's request to manufacture vehicles independently, saying that the relevant government bodies will have the last say on the matter.