Mazda Motor Corp <7261.T> and Ford Motor Co will dissolve their joint venture in China by 2012, a move that would further weaken the tie between the two automakers, Japan's Nikkei business daily reported on Sunday.

Mazda, Ford and China's Chongqing Changan Automobile Co <000625.SZ> have basically agreed to split their three-way tie-up, Changan Ford Mazda, into two entities, Nikkei reported, citing sources.

They will likely spin off the joint venture's factory in Nanjing as a 50-50 joint venture between Mazda and Changan Automobile Group, while Ford and Changan will run the venture's other factory in Chongqing, the business paper said.

Mazda wants more freedom to accelerate its business in China, -- now the world's biggest car market -- Nikkei reported.

It was sometimes difficult to coordinate production (in the three-way joint venture,) Nikkei quoted a senior Mazda official as saying.

Mazda's ties with Ford has weakened since the cash-strapped U.S. automaker reduced its controlling one-third stake in Mazda to 13 percent in 2008.

But Mazda will continue its joint production with Ford in the United States and Thailand for the time being, Nikkei added.

Mazda is estimated to have produced around 70,000 cars in China in the two factories in 2009 and the automaker plans to expand the capacity of the Nanjing plant to 200,000 units per year from a current 160,000, the Nikkei reported.

Mazda's China sales rose 40 percent in 2009 to around 180,000 units but the company, which has a much smaller presence in Chinese market than other Japanese car makers, wants to boost sales to around 300,000 units, the paper also said.

(Reporting by Hideyuki Sano; Editing by Jeremy Laurence)

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