CHONGQING, China - Production of the Mazda3 mid-sized sedan started amid much fanfare in February at the Ford plant in this steamy city in southwest China. A few months later, it stopped abruptly.
Ford had not obtained all the approvals needed to assemble the model.
"You have to apply for just about every step. In terms of our application, we didn't quite get it right," says Phil Spender, president of Changan Ford Mazda Automobile Co., Ford's car joint venture in China.
Ford Motor Co.'s sales in China more than doubled in the first five months of this year. But glitches such as the licensing mistake show the company is still trying to get it right in China.
Changan Ford's surge to 49,281 units in the first five months of this year was due largely to the introduction of the Focus mid-sized sedan last September. The model sold 27,200 units in the first five months, according to Automotive Resources Asia, a consulting firm in Shanghai.
By comparison, the top two models in the segment, Hyundai's Elantra and GM's Buick Excelle, each sold more than 73,000 units. The Toyota Corolla sold 34,670 units in the first five months of this year.
Last year, Shanghai General Motors, GM's primary joint venture in China, sold 324,842 cars in China. Changan Ford sold 62,925.
Ford is betting that sales of the Focus and other models will continue to increase.
"We will grow faster than the industry and our competitors for the foreseeable future," says Spender.
But industry sources say distribution of the Mazda3, once production resumes, will be difficult. Mazda's sales network in China is owned by First Auto Works and Mazda Motor Co., which assemble several other Mazda models through joint ventures.
The four companies - First Auto, Mazda, Ford and Changan Automotive Co. - are still debating how to distribute a car made by one company, Changan Ford, in a network partly owned by another, First Auto Works, say the sources. Ford declines to comment on any sales network dispute.
Analysts figure that the Mazda3 production license will come through eventually and that Ford's China business will continue to grow.
Models offer clues
The dozen or so Volvo S40 mid-sized sedans on the lot in Chongqing, and the two hatchback Focus models outside the door of the administrative building, are clues to the next two launches.
Ford and Mazda need to resolve their sales network problem by the time Ford's new plant in Nanjing starts up in late 2007, says Ashvin Chotai, head of Asian automotive industries research for Global Insight in London. That plant will assemble small cars.
Says Chotai: "That is a growth segment in China. It is a very major step in the development of Ford (and) Mazda's production and growth strategy in China. If the dispute is not straightened out, it will be a serious issue."
You may e-mail Alysha Webb at alysha[email protected]