The scramble to raise cash over at Ford continues apace. Recent press rumors out of Japan [via The Associated Press] say The Blue Oval Boys are talking with the Zoom Zoom Zoom folks about selling all or part of the American automaker’s share of Mazda. Ford first invested in Mazda back in 1975. FoMoCo increased it’s stake to 33.4 percent in 1996. Mazda was on the ropes in 1975, thanks to having most of it’s chips on the Wankel-cycle rotary engine. The oil shocks of the 1970s killed the rotary engine and put Mazda on Death Watch. Ford rescued Mazda with cash and know-how. Since then, the Mazda-Ford partnership has been one of the most productive in the industry. Today the companies share platforms and drivetrain development on a global basis. For example, Ford’s four-cylinder engines are based on the Mazda MZR family and Mazda has standardized on Ford’s V-6 engines. The two companies also share factories in Thailand, China and the US. Considering these deep ties it isn’t surprising to hear that “Ford would maintain some of its stake in Mazda and management ties.” But, with Ford burning over $2b every quarter; there aren’t many good choices left. Ford has made it clear that they aren’t interested in handing Mazda over to a competing auto maker, but will they have any choice?
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This deal makes even less sense than merging GM with Chrysler. Not only are they tied up for the forseeable future, I have a hard time seeing how the money they make out of selling Mazda would be bigger than the net gains of the synergy effects in keeping it. It would be more expensive for Ford selling their share, and then invest their own money for future r&d in future platforms. I mean, where’s the gain? What could they possibly earn more than immediate cash?
If the only thing Ford can come up with to save itself is to sell its best source of product…well, just hang it up already.
And to think I was considering buying some shares in Ford lately…
Maybe deathbed penmanship.
Maybe Mazda shares will get sold when Ford goes declares insolvency, to highest bidder.
Maybe Ford is writing its will with this, saying who gets Mazda when Ford dies, which act is in process.
Sad indeed.
Imagine Ford without Mazda. Tilt down from from steep dive to vertical dive and hit the afterburners.
(Moment of silence)
Well on bright side, maybe I will be able to buy a Mazda2 stateside instead of Fiesta.
As I said, this doesn’t make sense. Mazda is instrumental in Ford Motor Companys intentions in keeping costs down for the entire company. There’s some intense jv:s and platform sharing going around, and without Mazda, how would Ford be able to afford this on their own? I mean, isn’t this the whole point of merging companys? Cost reduction, synergy, sharing? The Ford/Volvo/Mazda partnerships is one of the few instances in this business where this model really works.
The Mazda DY-platforms underpins not only the Mazda2, but the current and the next generation Ford Fiesta as well.
The Ford C1 was a jv between Ford, Volvo and Mazda, and underpins the Ford Focus, Volvo C30/S40/C70, Land Rover Freelander, and Mazda3.
The Ford CD3 platform was designed by Mazda. Underpins the Mazda6 and the Ford Fusion with derivatives.
That’s the three most important platforms, but there are several others as well, that I don’t have time counting. The point is, without Mazdas expertise in building small cars, anything smaller than a Ford Taurus will be very expensive for Ford. So, I can’t really see this deal making any sense whatsoever.
Ingvar, I agree with you. Ford seems to be trying to find a financial investor who will buy some of the Mazda shares but still leave the joint ventures in place. Why would Ford do such a thing? Desperation. People do all kinds of things they don’t want to do when desperation hits home.
Personally I would like to see the entire executive ranks at Ford take a 50% pay cut until the thing is sorted out to demonstrate their commitment and willingness to share the pain. Those guys are all sitting on piles of personal wealth and should take one for the team.
@ Ingvar:
I completely agree. Ford would lose more money in selling its stake in Mazda than it could possibly gain. They may get some immediate cash and could milk their current platforms for a little while, but those platforms are aging and the cash won’t last long.
Me too. This would just be sad. Mazda seems to have a head of steam (as much as anyone can have right now). I REALLY want to see Ford make it. And I have been a fan of Mazdas for years, having owned two 626s. My first exposure was a friends 1973? 808, I believe it was. White with two big orange strips over the top. That vehice made several cross country trips.
Ford / Mazda has a had a similar relationship to VW / Porsche (except for who owns who), in that the common platform sharing with Ford allowed Mazda to make pure sportscars that were risky and probably not always profitable.
Whatever happens hopefully the MX-5 will remain the lightweight rwd car that it is, and an MX-5 drivetrain based coupe will still come to replace the RX-8.
Mazda + Mitsubishi + Suzuki?
Two brands. Suzuki (comprised of all current Mitsubishi and Suzuki vehicles worldwide – they fit like a hand & glove, only about 25% overlap) and Mazda as the upmarket brand (move slowly on that, as Audi did between 1970 and 1990).
The combination could be 12% owned by Mitsubishi Bank and 12% owned by Mitsubishi Heavy, and perhaps 9% owned by Ford. Total of the chunks owned less than the 33.4% combined portion (which affords total control over a Japanese company)
This would give the company stability. It would have plenty of savings after a few years of consolidation (or immediately; for one thing, selling Mitsubishi Motors’ Tokyo HQ would net a fortune).
If Ford sells its stake in Mazda, it would generate much needed cash flow…but then what? Ford would then be forced to engineer it’s own 4-cylinder engines, find another platform on which to base the Fusion/Milan/MKZ, Focus (the one everybody else gets, not the crappy N.A. version), and Fiesta.
On the other hand, Mazda would only need to develop a V6 engine of its own…or go with turbocharged fours. Oh yeah, and they wouldn’t have a rebadged Ford Ranger (B-series) or Ford Escape (Mazda Tribute) to sell anymore.
The phrase “cutting off one’s nose to spite his face” comes to mind! =)
By the way, why the hell does the Mazda Tribute still exist? Wasn’t it just a stop-gap until they could build one of their own? Sitting next to a CX7, who in his/her right mind would buy the Tribute? Sure it’s a few thousand more, but well worth it. Even the Mazda5 mini-minivan is downright SEXY in comparison to a Tribute….maybe it’s a pity thing?
Mazda is one of the few jewels in the Ford crown. Ford of Europe is the other.
By the way, why the hell does the Mazda Tribute still exist? Wasn’t it just a stop-gap until they could build one of their own? Sitting next to a CX7, who in his/her right mind would buy the Tribute?
They probably have a contract that has to run out. As opposed to the Gen 1 Tribute, which I saw (and still see) everywhere, I’ve only seen one Gen 2 on the streets. They worked hard to make the looks quite unremarkable.
I might be wrong, but the cargo area on the Tribute is larger then the CX7. My wife wants a Ford Edge, but practical me says save $ and get more capacity and mpg with the Escape. Then I started measuring cargo areas.
I wouldn’t mind a Tribute hybrid.
Being stuck with the old Duratec 3.0L really hurt the old Mazda6 V6. It was totally uncompetitive power wise with Toyota, Honda, and Nissan. They would’ve been much better off using an updated version of their own Miller Cycle V6 from the Millenia. The new 6 V6 at least has the power to compete, but the FE is a joke.
You guys have a lot of good points and I agree this would probably hurt Ford more then help but I’m just going to throw one thought out, and I’m probably wrong because I don’t know all the particulars.
Why does Ford have to stop developing stuff with Mazda if it sells its shares? I am assuming Ford must be sending development dollars Mazda’s way and that might be the kink in this. But plenty of other auto companies partner up to develop stuff (Ford-Gm 6speed autos, GM-Chrysler-Benz-BMW 2mode hybrid, GM-Toyota Vibe-Matrix, etc.) without having to have ownership in the other company. Sure it’s not to the extent that Ford-Mazda and also Volvo are sharing DNA. But they essentially need the partnerships to work to keep eachother businesses viable.
Unless they sold the shares to someone who was against them keeping the partnership there is no reason it still couldn’t continue even if Ford sold a majority of shares. Ford would still have to send development money Mazda’s way but maybe not as much for this not to totally collapse. I think that is the thing you guys are forgetting Mazda NEEDS from Ford, MONEY. They don’t sell enough product worldwide to do all the platform development they do, notice when they go their own on something they have to really tighten their belts(no Mazda5speed). Ford could generate some capital and reduce a little cost but keep the cozy relationship so they don’t shoot themselves in the foot, or more like head.
Deep down I have been hoping Mazda would get released from Ford for a long time. I really like Mazda’s products and the brand, I have just always felt Ford was holding them back, management wise. They still need Ford’s money though so I’m sure it would damage the brand rather then help in the long run.
OK, first: this idea was on the table when Mulally first arrived in late-2006. It was rejected then. I assume it was because as a part owner in Mazda, Ford gets a certain amount of income from its operations and Ford could more easily obtain financing and as a result the NPV of the income wasn’t worth the stake sale. Now, the situation is different. Ford needs to make sure its cash situation is solid and the NPV of the income from Mazda over the next two years is probably MUCH smaller than the value of its stake (it’s certainly not immune to the downturn). Ford wouldn’t necessarily sell the shares to another company or institution, it would probabaly just release them back onto the market. Ford doesn’t have anything special in its ownership other than Mazda stock.
Second, the selling of the stake would not necessarily end the relationship between Ford and Mazda. The only thing it would *allow* is for Mazda to pursue relationships and projects without vetting or even disclosing them with Ford management. Ford and Mazda have already invested significant energies into the next-gen CD platform and just launched their B-cars and are getting ready to launch their C-cars. Mazda could go elsewhere for their platforms or do them in-house, but the reality is that unless Ford goes belly-up, Ford and Mazda have a very beneficial relationship that is unlikely to end very quickly if at all. Mulally had talked about ending it and what that would mean back in 2006. The fact that Mazda has moved its new 6 onto the CD3-2 platform, taken Ford’s 3.5 for their use, joined their JV in China and looks like will be doing additional powertrain sharing in the near future suggests the partnership isn’t going anywhere.
Has Ford held Mazda back? No. Mazda is where it is today because of Ford’s investment in it – quality, product, engineering, etc. The great B and C-cars that have come from their cooperative efforts wasn’t just Ford forcing Mazda to do its work – Ford brought its expertise to each platform and it was their combined effort that produced cars like the 3 and now the Fiesta/2. Ford’s day-to-day involvement in Mazda since Fields left has been very little. Ford has a product pipeline and so does Mazda. Where they can overlap and want to overlap, they do, and it saves each company money. However, Mazda still has its independent MZR program, for example. But, again, it is a mutually beneficial relationship that I expect to continue at least in the medium-term.
The discussion has been what happens to Ford sans Mazda.
The big question is, what happens to Mazda without Ford? Who needs yet another smaller Japanese vendor? How will Mazda compete against the big Japanese competitors, when even they are feeling significant financial pain?
Look at Subaru? New product development in the pits- 4 speed automatics, 5speed manuals in the WRX, and all vehicles share one single platform. Yet Sub survives because it has its own unique niche.
Subaru’s “issues” relate to a couple of factors, ronin.
First, they’re pretty small (in terms of Japanese companies as well as “globally”).
Second, they’ve needed a “white knight” to help them along – first it was Nissan, which when it had its money issues, sold Subie’s stake to GM (which “used and abused” them rather than helping them), then when GM went “more broke” they sold their stake in Subie – to TOYOTA.
“The big question is, what happens to Mazda without Ford?”
An excellent point. Mazda by itself is not large enough to compete in today’s market. They either need to stay married to Ford for development and manufacturing purposes or find another partner.
Mazda and Ford both are probably highly motivated to keep the relationship alive even if some shares are sold to one or more third parties.
The other option perhaps would be to use Mazda as the hinge of a larger partnership between Ford, Mazda and another automaker. Maybe Tata, Hyundai or even PSA Peugot-Citroen.
Ford will be shooting themselves in the other foot (if the sell Volvo first) if their stake in Mazda is sold. I mean, c’mon! The Mazda/Ford partnership is one of the few bright spots in the automobile-dom. Most of everything Ford sells is somehow tied in to Mazda’s engineering skill and quality controls. I fail to see how this latest move by Ford will aid the company in any way.
I’ve got to agree with RobertSD and the more level-headed commentators here. I’d like to echo the above commentator’s statement in reverse: Most of everything Mazda sells is somehow tied into to Ford’s engineering skill and quality controls.
There’s a real system of collaboration between Mazda and Ford that has been going on for sometime, but has really reached a great level of equal collaboration in the last few years.
I would imagine and hope that if Ford does sell some percentage of their stake in Mazda that this collaboration will continue. In my opinion, this probably the least worrisome sale or divestiture by any automaker.