Mazda Motor and Ford Motor will dissolve their joint venture in China by 2012, Nikkei business daily reported.

The newspaper quoted sources saying that Mazda, Ford and Chongqing Changan Automobile had agreed to split their three-way tie-up into two entities. The joint venture’s factory in Nanjing is likely to become a 50-50 tie-up between Mazda and Changan, while Ford and Changan will run the other factory in Chongqing.

Mazda wants more freedom to expand its business in China, according to Nikkei. A company official said it was sometimes difficult to coordinate production in the three-way joint venture.

Mazda’s ties with Ford have weakened since the US automaker reduced its controlling one-third stake in Mazda to 13 per cent in 2008.

However, the Wall Street Journal noted that such a major move would still require the approval of China’s central government.