China Approves Realignment of Changan Ford Mazda

China's National Development and Reform Commission has cleared Chongqing Changan, Ford and Mazda to dissolve their three-way joint venture and replace it with two new ventures.

Ford says the deal is still subject to permission from China's commerce and industry ministries and a third agency.

The partners have been awaiting permission since May 2010 to break up Changan Ford Mazda Automobile Co. a 50% (Changan), 35% (Ford) and 15% (Mazda) venture. In its place, the three carmakers intended to create two separate 50:50 ventures that pair Changan with Ford and Mazda, respectively.

Ford initiated the breakup because it was winding down its equity stake in Mazda from 33.4% in 2008 to 3.5% at the end of 2010. The duo no longer co-develop vehicles or need to coordinate their strategy in China.

Analysts say Ford and Mazda each will gain a greater say in its own Chinese operations. The arrangement also will allow Ford to book a greater portion of the venture's results.

Mazda and the Chinese carmaker will build small cars in a 50:50 venture in Nanjing, where they currently make Mazda small cars.

Changan and Ford broke ground on Monday for a previously announced $600 million car factory their third in that city. The partners also plan to open a $750 million assembly facility in Hangzhou in 2015. By then they expect to double their annual capacity in China to 1.2 million vehicles.

Ford and Changan also are spending $850 million to erect two plants set to open in Chongqing next year that will add the ability to make 375,000 engines and 400,000 transmissions annually.