Misery Index

GM has also said that the $230 million is only three to seven days’ worth of cash, but by selling its stake in Suzuki, GM would save more money by delaying for two weeks incentive payments to its dealers.  Dealers were notified of the change in an email Monday.

Suzuki will finance the acquisition from its cash reserves, the Nikkei newspaper reported today, citing a company statement.

Suzuki Chairman Osamu Suzuki said in a statement Monday that the Japanese automaker and GM will continue to collaborate on projects currently underway.  “There will be no impact on Suzuki’s current business plan,” Suzuki, Chairman and CEO, Suzuki Motor Corp. said in a statement yesterday, indicating that they [GM and Suzuki] will cooperate to jointly develop environmentally friendly cars.

“As GM taking this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable, we wanted to support GM’s decision,” Suzuki had said.

With this stock sale, GM now owns no stake in any Japanese automaker as it already sold its entire stake in Isuzu Motors Ltd. and Fuji Heavy Industries Ltd. in recent years amid deteriorating earnings.

In 1981, Suzuki and GM entered a capital tie-up when GM acquired a 5.3% stake in the Japanese car-maker.  The stake was bolstered to 20% in 2000 but in 2006, GM reduced its stake in Suzuki to 3% as part of its restructuring program.

If you missed it, GM distributed a propaganda video on YouTube making the case that a $25-billion bailout now would be far less costly to the nation than allowing the industry to fail.

Ford Motor is selling 20 percent of its 33.4 percent stake in Mazda for Y52Billion but they will still remain the Japanese carmaker’s biggest shareholder however, its  reduced interest will give it less control over the company.  This means, many of whose current top executives on on loan from Ford.  Two of three board members from Ford are going to leave, Mazda said, and Takashi Yamanouchi, executive vice president, is going to become its new president and CEO.  Hisakazu Imaki, the current chief executive, will become chairman.

  

Mazda is also buying shares, 6.87 percent in off-hours trading on Wednesday morning for Y17.9 billion or Y184 each, the closing price on Tuesday.  Mazda said the two companies will continue their relationship.

The remaining stock will be probably picked up by a group of Japanese parts suppliers, trading companies and casualty insurers, who will divide Ford’s interest into segments of 1 or 2 percent each.

Ford President and CEO Alan Mulally said “This agreement allows Ford to raise capital that will help fund out product-led transformation, and at the same time, allows Ford and Mazda to continue our successful strategic relationship in the best interest of both companies.”  Mulally added, “Ford will continue to focus on the Ford brand worldwide and deliver the products our customers really want and value.”

Ford help invent Mazda in 1979 and had owned a steak in Japan’s fifth-largest automaker since then.  What is interesting to note is that Ford rescued Mazda from bankruptcy 12 years ago.

SOURCES:

• Ford Motor Company News Release