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Mazda’s favorite: Chang’an-Ford-Mazda or FAW-Mazda?

With Chang’an-Ford-Mazda (CFMA)’s new sales network established, Mazda’s products are now distributed through two separate channels in China – Mazda 2 and Mazda 3 are in CFMA’s network while Mazda 6 is still sold through the network of FAW-Mazda. It seems that Mazda has hopped on the fast track to success since it has two powerful partners like Chang’an and the FAW Group in China. Two sales networks seem a guarantee towards profits for both networks and bring more opportunities to Mazda’s further development in China. However, Mazda seems to favor FAW more than the other partner as it puts the more lucrative Mazda 6 models in FAW’s network.
 
Mazda (China) announced last October that CFMA aimed to set up 100 dealerships by 2007 and add another 50 in 2008. However, the number in the original plan soon shrank to 50 as the construction work of new dealerships has been moving extremely slowly. Some dealers are not optimistic about the future of the new sales network of CFMA. “Only some new models like Mazda 2 and the remolded Mazda 3 are sold via CFMA’s new network, while the more lucrative Mazda 6 is still in FAW-Mazda’s,” said one dealer. “As neither CFMA’s products nor its sales networks are well recognized by customers, it seems mission impossible for dealers to recoup the huge expenses they have spent on setting up a 4S dealership with all the compact models which only bring in small profits.”
 
Among all the authorized 4S dealerships of CFMA, many have been riding the fence, not in a rush to set up the 4S service centers. “Of the first five dealers in Beijing that acquired authorization, only three have finished construction work of the service center,” said an unnamed source. “As CFMA requires only brand-new 4S dealerships, so the other two, which have’t broken ground yet, will definitely not be open to business in 2008.”
 
“According to company rules, the new CFMA 4S dealerships will be located at least 5 km from those FAW-Mazda dealerships, so the new dealerships are dotted in the remote outskirts of Beijing,” explained the source. “This will bring on negative influence on these new dealerships which sells economy cars.”
 
CFMA aims at a sales goal of 110,000 units, half of which will be Mazda 2 and the other half Mazda 3. CFMA plans to launch an upgraded version of Mazda 3 and further cut the price to ensure sales. The company will slash ¥5,000 ($676) off the Mazda 3 after it enters the new sales network.
 
Meanwhile, FAW-Mazda lost the dealership of Mazda 3, but it will still distribute two imported models and a remodeled Mazda 6 (to be produced in China soon), which is a guarantee of substantial increase of sales in 2008. Local production of the Mazda 5 MPV has been approved by the National Development and Reform Commission. A senior official said that FAW-Mazda will consider producing the imported model once it proves a success after testing the waters. So the local production of Mazda 5 by FAW-Mazda is a matter of time. An FAW-Mazda dealer concluded.
 
Mazda announced last October to raise its shares in FAW-Mazda Motor Sales Co., Ltd. “If the capital increase is finished, FAW Car, Mazda and FAW Group will hold 56 percent, 40 percent and 4 percent of the sales company respectively. It indicates that Mazda is eager to establish a JV with FAW Group,” said an industry analyst.

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