Ford Motor Co.
), Mazda Motor Corp. and China's Chongqing Changan Automobile Co.
have received the final approval from China's central government
to split their three-way manufacturing and sales joint venture
(JV), Changan Ford Mazda Automobile (CFMA) into two.
Ford owns a 35% stake in CFMA, with Changan holding 50% and Mazda
the remaining 15%. CFMA has two major manufacturing bases in
China, located in Chongqing and the eastern city of Nanjing.
After the split, the two 50-50 joint ventures, Changan Ford
Automobile and Changan Mazda Automobile will own and operate
Chongqing and Nanjing operations, respectively. Changan Ford
Automobile, involving CFMA's Ford related business, will be
controlled by Ford and Changan and Changan Mazda Automobile,
involving the JV's Mazda-related business, will be operated by
Mazda and Changan.
The plan to split the three-way JV originated with Ford's desire
to severe ties with Mazda in 2008, when the former reduced its
stake in the latter to 13% from 33% and later in 2009 to 11% in
order to raise cash during the global economic crunch. Late 2010,
the Detroit automaker further reduced its stake in Mazda to
3.5% from 11%.
The partnership between Ford and Mazda began in 1979. Through the
partnership, Ford intended to develop small and fuel-efficient
cars using Mazda's technology while Mazda depended on Ford to
fund its research and development activities.
As Ford stepped back, Mazda sought
Toyota Motor Corp.
) help in 2010 to obtain key components of hybrid systems -
batteries, motors, control units and other electronic parts -
from the latter, through a hybrid technology tie-up.
Ford has embarked upon an aggressive expansion plan in China that
includes plans to triple its lineup in China by introducing 15
models, including the Kuga small sport utility vehicle by 2015.
Currently, the company sells seven models in the country.
In order to develop the new models, Ford will build new plants
raising its capital spending to about $6 billion annually by
mid-decade from $4.3 billion in 2011. In order to keep pace with
the expansion, Ford also plans to double its workforce by hiring
1,200 employees by 2015.
Ford anticipates global sales to expand by 50% to 8 million
vehicles by 2015 given the potential growth in Asia, mainly China
and India; and rising demand for small cars. The automaker
anticipates small cars to account for 55% of the total sales by
2020 compared with 48% presently. One third of the small car
sales are expected to come from Asia.
Ford, a Zacks #3 Rank (Hold) stock, manufactures Focus,
Fiesta, Mondeo and other models in China through CFMA. It also
holds a 30% stake in Jiangling Motors Corp. that makes light
commercial vehicles in the country.
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