China grants permission to Ford and Mazda to end their local partnership image

Ford and Mazda will end their partnership in China, after the local government has finally granted initial approval for the companies to break up.

Chinese authorities also allowed Ford and Mazda to reform their three-way joint venture with China’s Changan Automobile Company. Both Ford Motor Company and Mazda Motor Corporation had filed a petition since 2010, but China’s National Development and Reform Committee gave no decision until now, amid concern about overcapacity in the country. It seems that Beijing’s approval came during Ford CEO Alan Mulally’s recent trip to China, where he attended the groundbreaking of two Ford plants and announced plans to introduce the Lincoln brand there.

Under the proposed deal, Ford would set up its own 50-50 joint venture with Changan, and so would Mazda. It’s a good decision for both foreign brands because it gives each more control of the operation and a bigger share of the earnings.

In the current situation, Changan holds a 50 percent stake, Ford has 35 percent and Mazda just 15 percent. The decision will allow Ford to have a greater say in its expansion plans. Mazda too can now give its brand a higher profile, as China has been a weak link in its global operations. According to a report from Nikkei, Mazda will get the Nanjing plant, while Ford will get the Chongqing facility.