01Racing

Before anyone panics it probably wont have any effect on Canada

TOKYO - Ford Motor Co. is slashing its stake in Japan's Mazda Motor Corp. by nearly two-thirds, joining other struggling U.S. automakers in selling prized assets to stay afloat.

Ford, which owns 33.4 per cent of Mazda, will sell about 20 per cent, the companies said in a separate statements.

The sale would net Ford 52 billion yen (US$540 million) based on today's closing price of Mazda's shares.

Ford's move follows an announcement yesterday that General Motors Corp. was selling its remaining three per cent stake in Japan's Suzuki Motor Corp. back to the Japanese vehicle maker for 22.37 billion yen (US$230 million).

Hit by a slump in the U.S., Ford is burning through its cash reserves and, along with General Motors and Chrysler LLC, is seeking a US$25-billion government lifeline.

Ford racked up a loss of $8.7 billion in the second quarter, its worst ever result, and has used up $11 billion of cash in the past year.

Mazda said it and unnamed "strategic business partners'' would purchase the shares sold by Ford. Media reports cited Hiroshima Bank, Sumitomo Corp., Tokio Marine Holdings Inc. and Denso Corp. as possible purchasers.

Ford helped engineer a turnaround at once-struggling Mazda during the past decade, sending executives and sharing technology and parts.

Hiroshima-based Mazda, which makes the RX-8 and MX-5 Miata sports cars as well as a lineup of sedans, hatchbacks and crossovers, said the two companies will continue their strategic relationship.

Snrub

iTrader: (1)

At the rate Ford and GM are losing money, what's the point in selling off these assets? Seriously, it's like a weeks worth of extra cash burn. If they don't get the government bailouts they have to declare bankruptcy. In either case selling Mazda shares is not going to help them.

Interesting article on the subject. I think they make some good points regarding letting them go bankrupt. http://www.economist.com/opinion/dis...ry_id=12601932

Frankly I think there is a big incentive to declare bankruptcy: In the US they would get to offload all retired employee benefits to the US gov't. I realize that GM already offloaded pensions to the UAW, but this seems like a bigger upside than any downside in declaring bankruptcy.

Where do you guys stand on the bailout concept?

I really don't think Chrysler should be given any money. Cerberus purchased them a year ago. I'm sorry that they made a poor decision, but I think they should have to live with it.

Terrh

iTrader: (7)

the US government murdering the big 3 is just that... murder.

rd_turbo

iTrader: (4)

My rant...

While I'm against the bailout concept fundamentally, I think there is a fine balance that needs to be maintained. Sadly there is a lot at stake, and for capitalism to work the way it seemingly worked on this side of the world, we need to put up with a bit of unfairness so we can enjoy the plentiful crumbs that feed a strong middle class. Unfortunately in this case, what's happening is no different from what would happen in an underdeveloped nation where a corrupt government would take the lion's share of what is being sent in the name of aid before any of the mere mortals would get their cut.

In terms of the shrinking Big 3, I'd say they've had their chance for decades. It's been documented that while the Japanese auto industry was diligently building a solid technological empire (be it by reverse engineering, learning from criticism, establishing consistent, capable processes or whatever you want to call it), this side of the globe was preoccupied with the wrong things. Too little, too late. The attention to detail was simply not there for decades and by the time the Big 3 figured out what consumers were actually looking for, it was too late.