Ford set to cut ties with Mazda

By Reuters
Posted Oct. 18, 2010 at 1:34 p.m.

Ford Motor Co. and Mazda Motor Corp. look set to drift further apart as the U.S. carmaker plans to wind down its stake in the Japanese company, leaving Mazda freer to make decisions, but possibly in need of a new partner down the line.

Ford is set to sell most almost all of its stake in Mazda, which  stands at 11 percent, a source told Reuters Saturday. Trading house Sumitomo Corp. and other Japanese business partners of Mazda were in talks to buy the shares, the source said.

Sumitomo Mitsui Banking Corp. President Masayuki Oku said the bank was considering a purchase of part of Ford’s Mazda stake by year’s end. The bank is the core unit of Sumitomo Mitsui Financial Group Inc.

Speaking to a small group of reporters in Tokyo, Oku noted that Ford’s reason for selling its stake in Mazda was not because it needed cash, as some media reported.

“I can’t disclose what they are, but there are other reasons. If we become Mazda’s top shareholder, the operational and psychological relationship between Ford and Mazda will not change,” he said.

He said the bank did not intend to sell any stake it buys in Mazda to other automakers.

Ford issued a statement saying it continued to work with Mazda in areas of mutual interest and offered no comment on what it called “speculation” about its Mazda holdings.

Sources said Ford was looking to sell its Mazda stake to gain more freedom for its Chinese operations. A three-way venture between Ford, Mazda and Chongqing Changan Automobile Co. is  seeking government approval to split into two, with Ford and Mazda each partnering Changan separately.

“It sounds like Ford decided to cut its ties with Mazda, and it would rather nurture its Chinese venture businesses,” said Fumiyuki Nakanishi, a manager at SMBC Friend Securities.

Aaron Bragman of IHS Global Insight said from his office in Michigan said that, if Ford distances itself from Mazda, it is not a surprise.

“Mazda needs Ford a lot more than Ford needs Mazda,” said Bragman. “Ford has basically said it is their plan to work on small-vehicle development in-house. They will focus more on Ford than in the partnerships they have. They have the resources, they have the people to do it without an outside partner.”

JP Morgan Securities auto analyst Kohei Takahashi said he viewed a further break from Ford as positive for Mazda.

“Mazda has indicated that it wants to expand sales of its ‘SKY’ series of next-generation powertrains in the future, and we believe that achieving greater capital independence would help Mazda expand its business with companies outside the Ford group,” he wrote in a note to clients.

Shares of Mazda ended down 0.9 percent at 212 yen on Monday after falling almost 5 percent earlier. Most other auto stocks rose, while the benchmark Nikkei average closed flat.

Ford’s shares were up 0.5 percent at midday, at $13.87, in New York.

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One comment:

  1. jack (me) Oct. 19, 2010 at 9:16 a.m.

    So, I guess Mazda will still be around to provide platforms for the Mexican assembled Ford Fusion and Lincoln MkZ. Consider, the Mustang is the only Ford car based on an American design.