Green light for tripartite auto joint venture
Ford Motor Co announced on Friday that the Chinese Government has approved its new car joint venture with its Japanese unit Mazda and China's Chang'an Motor Corp.
The new venture, to be located in Nanjing, capital of East China's Jiangsu Province, will have an initial annual manufacturing capacity of 160,000 cars, which could be expanded to as many as 200,000 units, Ford said in a statement.
Mazda, in which Ford has a 33.4 per cent stake, will have an equity stake in the new venture, Ford said, without elaborating.
Initial investment in the new venture will amount to 4 billion yuan (US$483 million), said sources from Chang'an.
The new venture will use Mazda's manufacturing process as a blueprint to produce a number of Ford and Mazda vehicles, Ford said.
"With Mazda joining us in this new project, we expand our ongoing co-operation that has us building vehicles together on four continents (America, Europe, Asia and Africa). By using a combination of Mazda's manufacturing expertise and Chang'an's deep knowledge of China, we will all benefit," said Mark Schulz, Ford's executive vice-president.
The new venture is part of Ford's plan to invest more than US$1 billion in China announced in October 2003 and will be the second plant of the US giant's existing joint venture with Chang'an in southwestern Chongqing Municipality.
"Nanjing is an ideal location. This new location and Mazda's participation will enable us to grow even faster and to serve the populous eastern provinces of China even better," said Chang'an president Yin Jiaxu.
The venture in Chongqing, in which both Ford and Chang'an hold a 50 per cent stake, was formed in 2001 and produces Fiesta compact sedans and Mondeo mid-sized sedans.
The venture sold more than 50,000 vehicles last year, up from 17,000 units in 2003, said Ford China spokesman Kenneth Hsu.
Ford's total sales in China, including those of its affiliates Mazda, Volvo, Land Rover and Jaguar, more than doubled last year's from 2003, Hsu said.
Ford also produces Transit wagons at a joint venture in eastern Jiangxi Province with Jiangling Motor, which was acquired by Chang'an in October last year for 1 billion yuan (US$121 million).
Mazda and First Automotive Works Corp (FAW), China's leading vehicle producer, make Mazda6 sedans, and Familier and Premacy cars under technical licensing deals in northeastern Jilin Province and southern Hainan Island.
"Ford's expansion in China will not be affected by ongoing dramatic changes in the domestic auto market," said Hsu.
Growth in China's auto market slumped to 16 per cent last year from 34 per cent in 2003 as a result of the nation's macro-economic controls, soaring oil prices and customers putting off buying cars as they are expecting further price cuts.
"Many players will adjust their strategies in China in line with market changes. This will provide Ford with a good opportunity to catch up with early birds to the China market," he said.
Ford lags far behind rivals, such as Volkswagen and General Motors by sales in the Chinese auto market.
Chang'an has a bold expansion plan partly through co-operation with foreign partners.
The State-owned group, parent of the Shenzhen-listed Chang'an Automobile Co Ltd, announced on Thursday that it aims to double annual output to more than 1 million vehicles within four years and quadruple annual sales revenue to more than 100 billion yuan (US$12.1 billion) over the next six years.
Output and sales of the group, including that of Jiangling, jumped year-on-year by 42.93 per cent and 40.99 per cent to 582,000 and 579,000 vehicles in 2004.
The group reported 28.25 billion yuan (US$3.41 billion) in sales revenue last year, an increase of 35.2 per cent from 2003.
Its robust output and sales have enabled Chang'an to dwarf Dongfeng Motor Corp, another big name, to become China's third biggest automaker after FAW and Shanghai Automotive Industry Corp.