Japanese carmaker Mazda is restructuring its Chinese joint ventures to shore up its lackluster performance, reflecting the stress of smaller marques that struggle to find their position in the world's most competitive and largest vehicle market.
On Aug 30, the 16-year-old joint venture FAW-Mazda posted its farewell on Sina Weibo. According to a plan, the joint venture, established in 2005 and famed for such models as the Mazda 6 sedan, will no longer exist.
FAW and Mazda will shift their joint-venture stakes into Mazda's partnership with another Chinese carmaker, Changan.
After the merger, Mazda and Changan will each hold 47.5 percent of the new Changan Mazda, while FAW will own the remaining 5 percent.
The restructuring comes as the Japanese marque is seeing its sales shrink in the increasingly competitive Chinese market.
Mazda sold 214,574 vehicles in China last year, down from 227,750 units in 2019. Other Japanese carmakers Toyota, Honda and Nissan all sold more than 1 million cars in China in 2020.
Its downward spiral continued this year, with deliveries in the first seven months reaching 110,362 units.
A breakdown of the sales figures show that only 36,466 units were sold at FAW-Mazda, which has only two models in the market.
Analysts said Mazda's focus on internal combustion engine technology has developed a following for its vehicles, but its smaller lineup and slower shift toward new technologies are hindering its development.
While most carmakers globally adopt turbocharged engines, Mazda sticks to naturally-aspirated ones, and while many have unveiled massive electrification campaigns, Mazda has not yet offered any such model in China, they said.
Analysts said another factor that led to a smaller lineup and fewer sales at FAW-Mazda was probably its equity structure, with FAW holding a 60 percent stake and Mazda 40 percent.
They said Mazda has introduced more popular models into the 50:50 joint venture it built with Changan in 2007 to maximize its profits.
In a statement late last month, Mazda said: "The three companies aim to utilize every strategic and managerial opportunity in the new joint investment company and strive to make its business and management system optimal to adapt to the needs of the expanding Chinese market."
Mazda is just one of many smaller marques that are trying to bolster its business in the country.
Skoda, the Czech brand of Volkswagen, is not faring well either. The carmaker's sales were more than 340,000 in 2018, the record since its arrival in the country in 2007.
Yet deliveries have since fallen year by year. Only 25,000 sold in the first six months this year, according to statistics from the China Passenger Car Association.
The association said Skoda's current market share was 0.23 percent in the same period, down from 0.77 percent in 2020.
Possible causes include the rise of Chinese brands including Great Wall Motors' Wey and Geely's Lynk& Co, which excel especially in terms of infotainment functions, said experts.
Their rise is charming car buyers away from South Korea's Kia and Hyundai as well as French brands too.
Some brands have left China to seek opportunities in other markets, including Japan's Suzuki that specializes in smaller models, which are less popular in the country.
Source: China Daily
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