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Ford may be forced to sell Mazda stake

 
10 1,635 views Aug 4, 2008
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Ford may be forced to sell Mazda stake

Ford may be forced to sell Mazda stake

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Ford is still reeling from its $8.7 billion second quarter loss announced late last month, but already analysts are predicting more drastic things to come. Some analysts fear Ford may be forced to sell its stake in Mazda to help raise capital to fund its future projects, just as it has done with Aston Martin, Jaguar and Land Rover.

Speaking with BusinessWeek, Credit Suisse analyst Koji Endo told reporters that Ford will have no choice but to sell its 33.9% stake in Mazda “if things get worse” for the Blue Oval. However, Endo warns that a separation may still allow both companies to continue sharing platforms and components but that it would also leave Mazda open to a takeover from another buyer.

Another reason that stands in the way of Ford selling Mazda is the added profits the Japanese carmaker adds to Ford’s bottom line. Ford’s 33.9% stake is worth roughly $2.5 billion but Mazda is expected to return up to $750 million in earnings this year alone – one of the worst years on record for the auto industry. Mazda is also predicting sales of 1.48 million vehicles this year, up 9% on 2007 levels.

While the chance of Ford selling Mazda is slim, a sale of its Volvo subsidiary is much more likely. The Swedish carmaker, like Ford, is dealing with a massive restructuring program, cutting thousands of jobs and still recovering from a first quarter loss of $151 million. Furthermore, there have been a number of reports over the past several months suggesting that Volvo could be sold to a Chinese carmaker, however, Ford officials have continued to deny those rumors.



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Comments (10)

  1. By chris Posted: 8/4/2008 7:50pm PDT

    i'd look to ford "trimming the fat" even further before letting go of those last two companies. would GM sell saab or daewoo? no. because theres no point. those two companies are just like volvo and mazda... so intertwined into their american parent that a "sale" would be so difficult and costly that you might as well just forgo the idea.

    and as the article says.. mazda is one of the few continuing sucess stories in mass market autos
     
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  2. By Tony Posted: 8/4/2008 8:22pm PDT

    Why should Ford sell a goose laying a golden egg? Mazda is making profits. The problem is within the Ford network, they should deal precisely with that. Mazda's helping keep Ford afloat. Volvo's basically the research arm, if it could at least break even, it's still worth holding on to Volvo.
     
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  3. By NoNameDenton Posted: 8/4/2008 8:26pm PDT

    I do not see it happening, Ford needs Mazda, I say ditch Volvo if they have to sell something.
     
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  4. By chris Posted: 8/4/2008 10:04pm PDT

    no name.. dont forget that volvo is part of the reason why ford AND mazda are both putting out the good products they have (read: for's euro products)... the three companies are very important pieces of the same equation
     
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  5. By james Posted: 8/4/2008 10:12pm PDT

    chris - i'm curious, how do you know so much about cars? honestly, you have a huge wealth of information about just about every big company, powertrain, model, etc. to be entirely serious, i'm a little jealous. where do you get your information? (i'm not questioning the validity of your opinions, i'm genuinely curious)
     
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  6. By Dane Posted: 8/5/2008 7:01am PDT

    Without Ford, Mazda will crash.... There designs are inspired by the European models and are mostly based on them as well.... The new Fiesta is the only one that is actually based on a Mazda, which is an exciting car, but it is also a wait and see...

    Ford is the one to watch in the next few years... A lot of existing cars will be coming from the blue oval....
     
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  7. By chris Posted: 8/5/2008 6:40pm PDT

    james: for the last 2 year's ive been reading this site religiously... watching every episode of top gear.. ever... and reading. wikipedia is pretty good to get a good idea of what car is related to what other car with platforms and what not.

    also i'm a huge ford fan... you'd be hard pressed to run something incorrect by me about ford.
     
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  8. By chris Posted: 8/5/2008 6:48pm PDT

    dane.. it's a symbiotic relationship... take the C1 platform for example.. the current focus, mazda3, mazd5, volvo s40, c30, v0 etc... that platform was designed by a team of 30 ford engineers, 30 volvo engineers, and 30mazda engineers, based out of germany. ford actually out right payed mazda to make the 6 platform which currently underpins every desirable car that ford sells in NA... about 3 years before that platform ever had a ford badge on it.

    the same thing happened with the EUCD platform, which is currently underpinning the new 6 and mondeo, and probably the s60 if and when that thing ever gets a new redesign. but again, same thing. equal parts shared tech and design from ford, volvo, and mazda.

    I think mazda would be fine on their own now.. ford dumped 1 billion in cash into mazda in 2001 or so for them to develop the 6. ever since, mazda's been a gold star. they've taken the ridiculous sums of profit they got from that car and slammed it into the 3, the RX8, the MX5 (yeah i know it's the miata, but they did an extensive rework of it).. etc.
     
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  9. By NoNameDenton Posted: 8/5/2008 6:58pm PDT

    chris, Volvo's sales are tanking very badly, it is a money pit and only good for safety features and platforms, not as a brand.
     
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  10. ma_DavidArmstrong488 avatar DavidArmstrong488 Posted: 10/10/2008 5:42pm PDT

    I think NoName is right, but it's an opinion I've had about Lincoln and Mercury too:

    Ford needs to cut back on the spam-like number of dealerships. It can do that by eliminating the brands Lincoln, Mercury, and Volvo, and just make them trim levels.

    The Crown Vic and Town Car, for example, are twins. So why not just have a Crown Vic Lincoln trim package?
     
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