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Ford plans to sell Mazda

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Guardian UK news story

Adds Ford statement in paragraphs 4-5)

TOKYO, Oct 11 (Reuters) - Ford Motor Co is considering selling its stake in Japan's Mazda Motor Co, a source familiar with the matter said on Saturday, as debt-laden U.S. automakers struggle with weakening auto sales and the global credit crunch.

Japanese broadcaster NHK said earlier that Ford, which has 33.4 percent of Mazda, was considering selling about 20 percent and had already approached Japanese companies for the sale, adding Mazda would likely buy some of the shares.

The source did not specify how many shares Ford wanted to sell. Mazda has a market capitalization of about 408.5 billion yen ($4.1 billion), which would value Ford's entire stake at around $1.36 billion.

In a statement, Mazda said no specific decision has been made. Ford also said it had nothing to announce and did not want to comment on speculation.

"Our relationship with Mazda has not changed," Ford said.

Slowing auto sales and the global financial crisis have sent shares of Ford plunging to a 26-year low and its U.S. rival General Motors Corp to a nearly 60-year low, with investors questioning their turnaround plans.

Ford Chief Executive Alan Mulally on Friday ruled out a bankruptcy filing, saying the No. 2 U.S. automaker was focused on its turnaround and managing its cash "very, very carefully" as the market slowdown in the United States spreads to Europe and Asia.

NHK did not name the Japanese firms involved or specify what stage talks were in. Mazda is Japan's fifth-largest automaker by global output after Toyota, Honda, Nissan and Mitsubishi.

The Nikkei business daily said Japanese trading company Sumitomo Corp, which is Mazda's business partner, was considering acquiring part of the stake.

The paper also said India's Tata Motors might be a potential buyer, adding Ford was unlikely to sell the shares to Mazda's rival Japanese automakers.

The timing of the sale, coming during a global equity rout, underscores the problems facing Ford. Shares of Japanese automakers have been also hit this year by fears of sluggish global demand, slashing the value of its investment. Mazda shares have lost 38 percent in the past month.

Ford, which posted an $8.7 billion net loss in the second quarter, has stepped up plans to convert some truck production in North America to build more fuel efficient cars and bring over European-designed vehicles under a global production strategy.

The automaker's U.S. sales dropped 17 percent through the first nine months of the year, in a decline led by lower sales of large trucks like its market-leading F-Series pickups.

Bloomberg Japan story

Sumitomo, Tata Motors May Buy Ford's Mazda Shares, Nikkei Says

By Mayumi Otsuma

Oct. 11 (Bloomberg) -- Sumitomo Corp. and Tata Motors Ltd. are among the potential buyers for shares in Mazda Motor Corp. that Ford Motor Co. is trying to sell, Nikkei English News reported, without saying where it obtained information.

Ford, which owns a third of the Japanese automaker, is considering selling some of those shares to raise funds, Nikkei said. A Mazda executive acknowledged the company is preparing for potential sales by Ford, Nikkei said, adding that Japanese competitors are unlikely to buy the shares.

State-run broadcaster NHK earlier reported that Ford asked Japanese companies to buy Mazda shares from it.

Mazda has nothing to announce, according to a statement the carmaker released in Tokyo today. Ford spokesman Mark Truby did not immediately return a phone call seeking comment.

Debasis Ray, a spokesman for Mumbai-based Tata Motors, declined to comment. A call to Sumitomo's Tokyo office went unanswered.

U.S. automakers are facing financial trouble as the worsening credit crisis makes it harder for buyers to get loans and dealers to finance operations. S&P said this week it may further trim credit ratings for General Motors Corp. and Ford on forecasts for 2009 auto demand to fall to its lowest since 1992.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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How is this going to affect the sharing of platforms? Some of Ford's best products are based on the Mazda 6 platform and the Mazda 3 uses Volvo technology. I hope they still partner.

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And yet another foreign company uses Ford for it's resources and then ditches them.

Mazda (Just like LR and Jaguar) was a joke when Ford invested in and started running them. But then with Ford technology and platforms (You know, the very same 'crap' that the media consistently pans when it's under Ford cars) Mazda has built one of the best reputations in the industry.

If Ford goes through with this (God, I hope not) then they just seriously jeopardized their chances at being relevant in the future.

The Ford brand has a HORRIBLE image with consumers and the media will continue to exploit that. Lincoln is almost to the point of not being revived, and at best will be a mid-lux division for the foreseeable future. Mercury has been neglected for so long that it needs an entirely new identity constructed for it to become relevant. And Volvo will never have mass appeal becuase of its heritage and rep.

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Yeah, I would ignore all these reports guys. 90% of them are pure bull$h!. The global media smells blood and they aren't going to worry about logic or confirmation. Any rumor that they hear about will be reported as fact and who cares about the truth as long as it makes a good story. Unless it directly effects their ability to do business, no-one is going to confirm or deny anything. How many times have you heard Ford was going to sell Volvo to someone or other? Ford may use Mazda to raise more capital, but they won't sell shares if it costs them their controlling stake. Cerberus won't sell Chrysler to GM, because GM can't give them anything for it, and it has no value to GM. If Cerberus was gong to sell they'd approach Renault first, not GM, and if they had any sense they'd be talking to Mitsubishi and Peugeot, where there is both history and enormous synergy.

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And yet another foreign company uses Ford for it's resources and then ditches them.

Mazda (Just like LR and Jaguar) was a joke when Ford invested in and started running them. But then with Ford technology and platforms (You know, the very same 'crap' that the media consistently pans when it's under Ford cars) Mazda has built one of the best reputations in the industry.

If Ford goes through with this (God, I hope not) then they just seriously jeopardized their chances at being relevant in the future.

The Ford brand has a HORRIBLE image with consumers and the media will continue to exploit that. Lincoln is almost to the point of not being revived, and at best will be a mid-lux division for the foreseeable future. Mercury has been neglected for so long that it needs an entirely new identity constructed for it to become relevant. And Volvo will never have mass appeal becuase of its heritage and rep.

Sorry FOG I normally enjoy your rants but I have to agree w/ this one. First of all Mazda was and has always been a pretty darn independent company from Ford (also I don't think Mazda has used any products on a Ford chassis, excluding the CX7 or CX9). Ford however has gained a LOT of things from Mazda: from the 6 platform sharing to 4 cylinder technology, though not directly sharing its engines.

As for some peoples speculation that Ford could lose the best platforms it has, sorry I have to disagree about that. The C1 chassis may be a little more expensive than the 3's Protege based chassis but it seems to be quite world class. The 6/Fusion/Milan chassis is just not up to snuff w/ the Mondeo's chassis dynamics according to European reports.

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I thought Mazda was a huge benefit for Ford? Their products are beautiful, I see them on the road EVERYWHERE, and when people think Mazda, they don't get that negative vibe they do if I say the word Ford.

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The Mazda3 uses the C1 package as well, and except for and few old Latin-American/European 4s, the Triton V8s and the old truck V6, Ford has no engines it can actually call its own. Most of the 4s including the diesels are at least based on Mazda engines if not borrowed wholesale, the I5 is a Volvo, and the late small V6 was developed by Jaguar and de-contented for Ford/Mazda use. Even the new Ford-Mazda V6s are based on the older Jaguar AJV6.

BTW, it now seems that Ford is only selling a token stake (just 1%) to Denso as a subtle kickback for securing future supply contracts.

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Sorry FOG I normally enjoy your rants but I have to agree w/ this one. First of all Mazda was and has always been a pretty darn independent company from Ford (also I don't think Mazda has used any products on a Ford chassis, excluding the CX7 or CX9). Ford however has gained a LOT of things from Mazda: from the 6 platform sharing to 4 cylinder technology, though not directly sharing its engines.

There have been a few Mazdas on Ford platforms--trucks and SUVs..their Ranger-based B-series pickup, the Navajo and Tribute SUVs...

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I thought Mazda was a huge benefit for Ford? Their products are beautiful, I see them on the road EVERYWHERE, and when people think Mazda, they don't get that negative vibe they do if I say the word Ford.

In all honestly, real ford fans here in the US don't gush a lot about the benefit of Mazda on Ford. Seriously, most cred that Ford has established with their own fan base is from Mustangs, european operations, and such. Ford's more recent successes have been trucks and SUV's. The Fusion was one area where the Mazda connection was hailed by the press here. But its not like the people who buy the fusion are rabid mazda fans. Also, mazda has made no real contribution to Lincoln or trucks. People maybe recall the Probe. I don't think that will go down as an icon in Ford history. Mazda provided some input on some pieces that are used in the Edge and such and the 4 cylinder engines here. Honestly though, Ford got a lot more mileage out of their tie up with Volvo than anything, in Ford circles here in the US. Ford gets its biggest rep from its euro influenced programs, and from its brief Yamaha tie ups also.

Mullaly is smart to rely more on the Euro arm of Ford, but Mazda does provide value to the esteem of Ford...its just not huge like some people think it is, to ford fans here.

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Argument of selling Mazda seems like on the same lines of killing Pontiac. Mazda is profitable for Ford. Almost all of Mazda's cars share platforms with Ford siblings. Mazda gives Ford access to Japan which no other American manufacturer has. The only difference between Mazda and Pontiac is that Mazda - is, Pontiac - can/could be. Ford would not make a good move if it gets rid of Mazda. Lincoln or Merc getting an axe will make sense instead.

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The tribute was Mazda-based, an old 626 platform, and developed by Mazda for Ford. Ford was more involved with the new model, but that is more V1.5 than an all-new crossover.

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The B series p/u and Navajo sold [sell] poorly, Mazda really didnt want them.

Also, Ford is not selling ALL its stake in Mazda, so dont panic.

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And yet another foreign company uses Ford for it's resources and then ditches them.

Now that is an unsurprising bias on your behalf, Mazda is not ditching Ford, Ford is ditching Mazda. And Ford would not be in the quality ranking they are now of it was not for Mazda designing their 4 bangers, Flex's, Fusion, Milan, Edge, MKX and Escape platforms for them. If anything, Ford began to rape Mazda with their own products by dumping their own (Ford) V6's into Mazdas.

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Now that is an unsurprising bias on your behalf, Mazda is not ditching Ford, Ford is ditching Mazda. And Ford would not be in the quality ranking they are now of it was not for Mazda designing their 4 bangers, Flex's, Fusion, Milan, Edge, MKX and Escape platforms for them. If anything, Ford began to rape Mazda with their own products by dumping their own (Ford) V6's into Mazdas.

More gross generalizations.

:rolleyes:

Yep, my post was biased, because it is pure opinion. That's how I see it.

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More gross generalizations.

:rolleyes:

Yep, my post was biased, because it is pure opinion. That's how I see it.

Yeah it was bias, because you made it sound as if though foreign companies come crawling to US companies for help, and then suck them dry of THEIR resources. I'm sorry, but in Mazda's case, it was the other way around. Stop making things sound as if though everything NON American is evil, and poor American companies are suffering, and they did nothing wrong to deserve such harsh treatment.

Edited by Polish_Kris
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Yeah it was bias, because you made it sound as if though foreign companies come crawling to US companies for help, and then suck them dry of THEIR resources. I'm sorry, but in Mazda's case, it was the other way around. Stop making things sound as if though everything NON American is evil, and poor American companies are suffering, and they did nothing wrong to deserve such harsh treatment.

Let me re-phrase myself.

That was MY OPINION If you don't like it, don't f*ckin' read it.

Now STFU like a good little troll and go pester someone else.

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Article about Ford's investment in Mazda:

Ford, in Mazda Investment, Is Revered as Well as Feared

By ANDREW POLLACK

Published: April 13, 1996

The Ford Motor Company's decision to take effective control of the Mazda Motor Corporation represents a judgment that the ailing Japanese car maker, with its sales falling, can no longer make it by itself in an increasingly global and combative auto industry, executives and analysts said yesterday.

"They are a small company and today's world is getting very competitive," Wayne Booker, executive vice president of Ford, said at a news conference in Dearborn, Mich.

But in Japan, the effective takeover of a leading company in a core industry by an American company was greeted with some of the same sense of letdown and concern with which many Americans initially viewed the Sony Corporation's purchase of a Hollywood studio.

A decade ago, American auto makers were struggling to emulate the Japanese. But now, Henry D.G. Wallace, a longtime Ford executive who cannot speak Japanese, will become the new president of Mazda. Most big Japanese companies do not have a single foreigner on their boards and a foreign president is virtually unprecedented.

Only a few weeks ago, one Mazda manager insisted that Mr. Wallace, who is Scottish, would never become president because it would mean a loss of face and morale within Mazda. Mr. Wallace, who was dispatched from Ford in 1993 to be an executive vice president at Mazda, was already effectively in control of the company, he said.

Under the agreement announced yesterday, Ford will give Mazda a much-needed capital injection of 52 billion yen, or about $480 million. That will increase Ford's stake in Mazda from the roughly 25 percent it has held since 1979 to 33.4 percent, a level that gives it effective control under Japanese law.

Ford will pay 363 yen for each of the newly issued Mazda shares, well below Mazda's closing price of 465 yen on Thursday; Mazda's shares did not trade yesterday on the Tokyo Stock Exchange.

Ford's new stake in Mazda is not completely unprecedented. The General Motors Corporation owns an even larger 37 percent of Tokyo-based Isuzu Motors Ltd. G.M. has also stationed its executives at the Japanese truck manufacturer in posts as high as executive vice president. But G.M. never tried to exercise the hands-on control that Ford has with Mazda.

Workers at Mazda and people in Hiroshima, where the company is based and is a mainstay of the economy, had mixed feelings. Some hoped Ford would revive Mazda, while others worried that American management would end the practice of lifetime employment.

"That's what the young workers are talking about -- tomorrow you will be fired," one young manager in Hiroshima said. "This kind of joke has been going around since the announcement."

But Mr. Booker of Ford said yesterday that he did not anticipate any major cuts in Mazda's employment.

In Tokyo, Mr. Wallace said at a news conference that his priority was "first and foremost to establish and maintain a very strong corporate identity for Mazda worldwide." Mr. Wallace -- who has insisted that he is an employee of Mazda, not Ford -- said the image of a company is not based upon "who the shareholders are and who the component makers are."

Ford is now expected to integrate Mazda more fully into its global operations. For instance, Ford can turn to Mazda for product design, especially for the fast-growing Asian market.

"They are very nimble," Mr. Booker said. "They can develop products very quickly. They have a good knowledge of what Asian customers want."

He said Ford would "quite likely" sell its own cars through Mazda dealers in Japan, where American auto makers have faced difficulties in signing up dealers.

To get any value out of Mazda, however, Ford had to save it, analysts said. "It wouldn't have gone bankrupt, but it would have just gotten smaller," said Saul Rubin of SBC Warburg in Tokyo. "With Ford behind it, I think it can regain its competitiveness."

To some extent, Mazda is already on the mend. Even though the company posted net losses totaling 80 billion yen, or roughly $800 million, in the fiscal years 1993 and 1994, Mazda expects to have reached the break-even point in its fiscal year that ended last month.

But that improvement comes mainly from severe cost-cutting, not better sales. The company slashed investment in new plants and equipment in 1995 to less than 20 percent of its level in 1992.

"They cannot continue to reduce investment forever," said Chikao Masuzawa, an analyst at Salomon Brothers in Tokyo. "They have to refurbish their factories at some time."

Meanwhile, Mazda's production of vehicles in Japan plunged 21 percent in 1995 from a year earlier, as both its domestic sales and exports dropped sharply. From 1990 to 1995, sales by Mazda in Japan fell 40 percent and its exports 48 percent. In the United States, its sales in the first quarter of this year are down 17.4 percent from the corresponding period last year.

The recent problems of Mazda stem from its vast expansion in models and dealers during the Japanese boom of the late 1980's. When the economy slumped, Mazda was left with excess capacity and costs. Mazda has relatively limited production outside of Japan, making it more vulnerable than many of its Japanese competitors to the adverse effects of a stronger yen.

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Need we remember one of Mazda's largest PR nightmares due to financial problems? Amati

Mazda Drops Luxury Line Plan for U.S.

By ANDREW POLLACK,

Published: October 27, 1992

The Mazda Motor Corporation sharply scaled back its efforts to enter the luxury automobile market today, saying it would abandon plans to set up a separate dealer network in the United States and Canada to sell new high-priced vehicles under the Amati name.

Mazda, struggling to remain profitable, also said it would stop work on one of the two luxury cars it has been developing for sale in North America, but would continue work on the other.

The decision is one of the most significant yet in a retrenchment by Japan's automobile companies, which are struggling to cut costs because of weak vehicle sales at home and abroad. Losses or sagging profits have caused some companies to delay new-model introductions and to curtail the varieties in their product lines.

Mazda is "kind of pulling in its horns for a while," said Ben Moyer, automobile analyst at Merrill Lynch Japan. "They've extended themselves too far, and the expense of setting up a new distribution channel at this time will be too burdensome for them."

The Hiroshima-based company had hoped its new Amati brand would take its place alongside Toyota's Lexus, Nissan's Infiniti and Honda's Acura, the three Japanese luxury brands that have been gaining in a market segment long associated with European brands like Mercedes Benz and BMW.

Mazda, which announced the formation of its Amati brand in August 1991, had already recruited 67 dealers in the United States and 15 in Canada to sell the cars, which had been expected to reach the market in the spring of 1994.

Mazda's decision was a bitter disappointment to Lord, Dentsu & Partners, an advertising agency in Los Angeles and New York that in January bested four other agencies in a five-month review for the Amati account, estimated at $60 million to $70 million. Recently, there had been speculation that the budget would climb as high as $130 million to cover additional marketing expenses like local dealer advertising.

"I've never been in this situation before," said Richard Lord, chairman and chief executive, in New York. "It's the loss of great expectations rather than a chunk of business.

"What we've lost was a piece of tomorrow," he added. Mr. Lord said the agency had been reimbursed for the limited work it had done on Amati to date, adding that the few additional employees hired so far for the account would be reassigned.

Mazda is projecting about a 65 percent decline in profits this fiscal year after a similarly large drop last year. But Mr. Moyer, the Merrill Lynch analyst, projects that Mazda, on a consolidated basis, will post a net loss of 3 billion yen, or about $25 million, in the fiscal year that ends next March.

Another reason Mazda cited for its decision is that the luxury car market in the United States is weaker than expected. In addition, the yen's strength against the dollar makes it harder for Japanese products to compete in the United States.

The company did not say how much it expected to save from the moves. But Takaharu Kobayakawa, general manager of corporate communications, said the company had not yet invested heavily for machinery and tools to produce the model that is being canceled. Nor did he think that prospective Amati dealers had invested much yet.

Mazda had never released many details about the Amati models. The larger one, which is being killed, was intended primarily for the United States and Canada and was expected to compete with the Lexus LS 400 and Infiniti Q-45 luxury sedans. Some rumors and press reports here say the car was to have had a huge 12-cylinder engine.

The second vehicle, which will also be sold in Japan, is expected to compete with BMW's 535 series. Mazda spokesmen said the company still intended to sell this model in the United States but had not decided how to do so. Presumably, the company could use its existing dealer network, which Mazda said it would now seek to strengthen.

Mazda said it had been aiming at sales of about 21,000 luxury vehicles a year in the United States and Canada. Mr. Moyer of Merrill Lynch said that with such low numbers, it would be hard to see how the company could have made a profit.

Both models were to have been built at the company's factory in Hofu, in western Japan, in which computerized automation allows the production of up to 12 different models on the same assembly line. This flexible manufacturing makes it possible, at least in theory, to produce models in small volumes but realize the cost advantages of mass production.

But Mazda has been criticized by analysts for trying to do too much. In an effort to keep up with Toyota and Nissan, its larger competitors, it has vastly increased its number of models in the last few years. It has also set up five separate distribution channels in Japan. Cutbacks in Auto Racing

Mazda also announced today that it would sharply reduce spending on automobile racing. It will suspend its entries for at least two years in sports prototype car races, including the Le Mans 24-hour endurance race in France. The company said it would redirect its resources to strengthening product development and intensifying efforts in research related to pollution reduction and safety. Honda, citing similar reasons, recently said it would drop out of Formula One auto racing.

Earlier this year Mazda, to raise capital, sold half its American factory, in Flat Rock, Mich., to the Ford Motor Company, which has long owned 25 percent of Mazda.

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Yeah it was bias, because you made it sound as if though foreign companies come crawling to US companies for help, and then suck them dry of THEIR resources. I'm sorry, but in Mazda's case, it was the other way around. Stop making things sound as if though everything NON American is evil, and poor American companies are suffering, and they did nothing wrong to deserve such harsh treatment.

Yeah, Ford first linked up with Mazda in the '70s for a JV with the Courier pickup, then next in the late '80s for the NA 2nd gen Escort (and the Merc Tracer)....and Ford did use Mazda's diesels in several models in the mid '80s. In NA at least, the relationship was usually Ford using Mazda platforms and/or engines, very rarely the other way around like the Navajo and B-series truck.

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Ford originally planned to replace the Mustang with a mazda-based FWD coupe = Probe. That was on the 626/MX-6 platform IIRC.

What I miss is the last-gen 929... :drool:

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Let me re-phrase myself.

That was MY OPINION If you don't like it, don't f*ckin' read it.

Now STFU like a good little troll and go pester someone else.

Boy... Someone is on the rag, relax! It is only the internet.

BTW, what I wrote is MY OPINION and observation, so there 'ya go!

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