Ford Australia will take full control of Ford Performance Vehicles (FPV) after UK-based partner Prodrive announced it is cutting ties with Australia’s declining large car market.

Ford Australia and Prodrive today signed a Memorandum of Understanding that will see Ford purchase the assets of FPV to independently engineer, produce and market the homegrown performance car brand’s vehicles in Australia.

Ford Australia president and CEO Bob Graziano confirmed the deal during a teleconference with Australia’s automotive media on Thursday morning, revealing that negotiations are expected to be completed shortly, with Ford taking control of FPV from the end of 2012.

FPV was previously operated as a joint venture between Ford Australia and Prodrive, with the latter controlling 51 per cent of the business.

Prodrive managing director Bryan Mears admitted the decision to hand over control of FPV to Ford was made after a review of the business, from which both partners concluded the current business situation was not sustainable in the long term.

“The facts are you can’t ignore what’s happening in the Australian market place,” Mears said. “We’ve come to the conclusion from Prodrive’s perspective that we need to protect the brand and promote it.”

The new deal will see FPV vehicle assembly shift from Prodrive’s Victorian plant to Ford Australia’s Campbellfield operations, joining the standard Falcon and Territory on the production line, while production of FPV engines will relocate to Ford’s Geelong engine plant.

Graziano confirmed the additional work at both Ford factories would save a small number of the 440 jobs that were to be lost to redundancies that Ford announced last month, although he admitted approximately 32 FPV workers would be made redundant by the end of the year as a result of bringing the engineering, production and marketing responsibilities in-house.

Graziano said current and future FPV customers should experience “little if any change to the way they interact with the FPV brand”, and confirmed current service and warranty arrangements would not be affected by the change in the manufacturer’s management.

“We recognise the passion and dedication of FPV enthusiasts and their desire to see Ford high-performance vehicles available in the market,” Graziano said.

“Although this segment is relatively niche, it is an important part of Ford’s performance history and DNA. Both partners have worked hard to ensure the FPV brand can continue to thrive in Australia post the change to our current arrangements.

“We look forward to continue to providing them with the outstanding performance and specialist service they have enjoyed to date.”

Prodrive’s Mears said the challenges of the Australia’s large car segment, which has experienced a rapid sales decline in recent years as customers have moved into smaller cars and SUVs, was a key factor in his company’s decision to step away from the FPV business, which manufacturers only Falcon-based products.

“This is a commercial decision and we’ve reached that decision together,” he said.

“Our collective view, and based on where we are in the market place, this was definitely the best outcome, and for Prodrive’s part, our interest is entirely on protecting the brand and encouraging Ford.”

Mears confirmed there would be no change to the Ford Performance Racing V8 Supercar team, which operates as a separate entity with its own management structure.

Graziano added that Ford Australia’s commitment to the FPR factory team – whose driver Mark Winterbottom currently sits one point off the championship lead – would continue through 2013 as originally planned.

Graziano said the move to bring FPV in-house would not lead to significant changes in the performance arm’s line-up, with the range to remain contained to Falcon-based products.

“It’s probably too early to talk about any changes to the portfolio and for the foreseeable future from an FPV prospect perspective [customers] won’t see a significant change in the line-up in terms of the vehicles that we’re offering through FPV.”

Graziano was optimistic about FPV’s potential to expand its sales under complete Ford Australia ownership, and said the company wouldn’t have agreed to the deal if it didn’t see potential for growth and improvement.

“I don’t think that any of us didn’t try to improve the sales performance of the FPV brand and that’s going to continue in the future.

“You look at the product, and the [limited edition FPV GT] RSPEC is an example that was launched, those are all done with an eye to improving not only the brand but also the performance of that brand … and we will as Ford Motor Company continue to build that brand going into the future.”