Mazda Motor, 33.4 percent owned by Ford Motor, is set to snatch up an equity stake in the Detroit-based automaker's joint venture (JV) with China's Chang'an Motor, Ford Motor China said yesterday.

 

In return, the Chang'an Ford JV will invest in Mazda's car sales venture with another Chinese vehicle producer - First Automotive Works Corp (FAW) - as a new shareholder, said Kenneth Hsu, vice-president of Ford Motor China.

 

Hsu declined to reveal financial details of the two expected deals.

 

"The arrangement will be in the interest of all concerned parties," he told China Daily. "A four-party alliance is emerging between Ford, Mazda, Chang'an and FAW, which will facilitate our expansion in China."

 

Analysts said the plan is apparently a Ford-driven compromise between Chang'an and FAW, which are scrambling to get in on Mazda's rapidly rising brand in China. FAW is the biggest Chinese automaker and Chang'an ranks No 4.

 

Last week, Chang'an Ford started to assemble the new Mazda3 at a plant in Southwest China's Chongqing Municipality.

 

However, the 2-litre sedan will be marketed later this month by the FAW-Mazda sales venture based in Jilin Province in the northeast, according to a previous deal.

 

"The new equity plan will be a good solution to the separation between manufacturing and marketing of the new Mazda3 and future Mazda products in China due to different partnerships," said Metthew Li, a Beijing-based analyst from consultancy Automotive Resources Ltd. "It will help unify Mazda's branding activities in China."

 

Li said Mazda is a promising brand in China and will continue to play a key role in Ford's group sales in the world's third biggest and the fastest-growing car market.

 

Mazda sold 133,778 vehicles in China last year, surging 51 percent from 2004. The figure accounted for three-fifths of Ford's group sales in China.

 

Mazda earlier announced that it aimed to sell 300,000 cars in China by 2010 and planned to introduce eight new models in the nation from 2005 to 2010.

 

It expects its sales in China to grow by 10 percent this year from 2005.

 

The new Mazda3, reportedly to retail between 150,000 yuan (US$18,500) and 200,000 yuan (US$24,700), will go head-to-head with the Buick Excelle, Toyota Corolla, Hyundai Elantra and Honda Civic, which is also to go on sale in China this month.

 

The FAW-Mazda sales venture said it expects to sell around 20,000 units of the model this year.

Mazda formed links with FAW earlier than Chang'an.

 

A FAW subsidiary in Hainan Island started to produce Mazda-branded cars in the 1990s under technical licensing deals. It is making the Familier sedan and Premacy van.

 

FAW's other affiliate in Jilin also started to assemble the Mazda6 sedan in 2002.

 

The FAW-Mazda sales venture was launched last year with a registered capital of 100 million yuan (US$12.3 million). The venture, in which FAW and Mazda control 75 percent and 25 percent, respectively, announced last year that it would be responsible for marketing all of Mazda cars made in China.

 

Chang'an Ford was launched in 2001 with both parents controlling 50 percent. It now has a registered capital of US$110 million.

 

Besides the Mazda3, it produces Ford's Fiesta, Focus and Mondeo sedans in Chongqing with an annual capacity of 200,000 vehicles. The venture is also building a new car plant in East China's Jiangsu Province, which will start to produce Ford and Mazda cars in 2007 with a capacity of 160,000 units.

 

Last year, Mazda formed an engine JV with Ford and Chang'an in East China's Jiangsu Province. It will be operational next year with a capacity of 350,000 engines for both Ford and Mazda vehicles.

 

"Ford, together with Mazda, is carrying out the multi-partner strategy in China for bargaining power with local companies. Many of the other foreign carmakers are also doing so Toyota, Honda, Hyundai and Volkswagen," said Jia Xinguang from China Automotive Industry Consulting and Development Corp.

 

However, as a result, it will be difficult for them to smoothly handle relations with different partners in China, Jia said.

 

Ford is lagging behind many rivals in China's car market, such as Volkswagen, General Motors and Hyundai, but it is showing a strong growth momentum.

 

Ford's group sales in China, including Mazda, Volvo, Land Rover, Jaguar and Lincoln, jumped by 41 percent to 220,000 vehicles last year.

 

Ford expects its 2006 sales in China to grow faster than last year, according to Hsu.

 

Sources from Chang'an Ford said the venture will produce Volvo's S40 sedan this year in Chongqing.

 

Car sales in China grew by 27 percent to 3.1 million units last year from 2004.

 

(China Daily March 2, 2006)