Chongqing Changan Automobile, Ford's car manufacturing partner, is in talks to produce a mid-sized car in China using Ford technology but carrying a Changan brand, two sources said on Monday.
Changan, one of China's top state auto groups, has been making Focus, Mondeo, Fiesta and other Ford models in a three-way tie-up with the Detroit automaker and Mazda Motor.
"Ford CEO Alan Mulally met Changan chairman Xu Liuping during his trip to China earlier this year. They had in-depth talks on ways to bring their cooperation to the next level," one source with direct knowledge of the matter told Reuters.
One option both partners are seriously considering would see Changan making a mid-sized sedan based on a Ford platform in its own production base in Nanjing, close to Shanghai, said a second source who was briefed on the matter.
The sedan will be sold under Changan's name, but will be priced lower than the comparable Ford model to avoid direct competition. Ford will then get a sizeable share of the proceeds, both sources said.
Changan Auto signed a strategic cooperation agreement with the Nanjing municipal government, pledging to further expand its auto production base in the city.
"If things work out smoothly, the Ford model will be made in Changan's production base in Nanjing to differentiate it from Changan's lower-end models made at its homebase in Chongqing," said one of the sources.
It was unclear at this stage which of Ford's car models will be made at Changan's Nanjing production base, both sources said.
China's spokesman declined to comment, while Ford's China spokesman, Craig Vonessen, said it was "market speculation".