Ford Motor Company, after 12 years of holding a controlling interest in Mazda Motor, will be selling its 20 percent stake in the Japanese automaker in order to raise vital cash. The news comes around the same time as the GM’s sale of its stake in Suzuki, another Japanese automaker.
Ford first claimed a stake in Mazda back in 1979, and Mazda has already announced earlier Tuesday that will buy back 6.87 percent of its own shares, with the remaining 17.9 shares to be kept as treasury stock, and the remaining shares to be purchased by business partners.
With the worst economic crisis to hit the automakers since the Great Depression in full swing, the Big Three automakers including Ford are trying to get billions of dollars from the federal government to bail them out as they head closer to bankruptcy. Meanwhile, to buy time, Ford exercised one of its few options to gain cash flow through the sale of Mazda. Personnel at a Ford Dealership in St. Louis half expected the news despite the success of recent hits such as the popular CX-7 crossover. Also seeing the signs of such a move was Reading Used Cars, which realized the automaker was going to need to make additional concessions to stay lean and competitive against tough obstacles.
Ford’s sale of Mazda is going to yield more than $538 million. The boost in cash is crucial due to huge losses month after month while the company bleeds cash. Slowing auto sales, along with the credit crunch, have hit Ford hard, even with a fresh lineup of vehicles at Ford Tacoma and Ford dealers across the country.
Despite the sale, Mazda and Ford still plan to hold on to strategic ties. Ford’s stake in Mazda began back in 1979 and the automaker gained control of the Mazda in 1996 when Mazda was suffering from sales setbacks and lackluster products.
There’s plenty of platform sharing and intertwined manufacturing operations between the two automakers, which Salinas CA Mazda doesn’t expect to be changed in the short term. Ford is perhaps used to getting rid of its long-held brands at this point as the automaker has recently sold Jaguar and Land Rover to Indian automaker Tata Motors, while it reportedly seeks a buyer for Volvo.
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