End of 2008, Ford was in dire need of cash and decided to sell off a 20 percent chunk of their 33.4 percent holdings in Mazda. Both promised that their cozy relationship would not suffer over something mundane like money. Of course, it wasn’t so. Their relationship disintegrated in record time. And now, they will make it official. Ford Motor Co. has decided to reduce its stake in Mazda by selling a large portion of its remaining shareholdings to Sumitomo group firms and other companies with which Mazda enjoys close business ties, The Nikkei [sub] just learned.
According to The Nikkei, Ford will sell most of their remaining shares, leaving a token presence of 3 percent or less. Once the sale is completed, Ford will no longer be Mazda’s top shareholder.
Mazda has asked Sumitomo Mitsui Banking Corp., as well as Sumitomo Corp. and other major Sumitomo group firms, to take shares off Ford’s hands. Some of Mazda’s parts suppliers will also be asked to help out.
The Nikkei thinks that when all is said and done, each buyer will be allocated around 1 percent of the outstanding shares. Sumitomo Mitsui Banking would end up owning more Mazda shares than Ford. Sumitomo Mitsui Financial already has a 2.9 percent interest.
Once upon a time, Ford sent the people to run Mazda. After they sold their first big batch of shares, their relationship degraded to mere “exchanges of information.” If an executive from Ford wanted to attend a meeting at Mazda, the matters discussed had to be carefully vetted beforehand and signed-off in advance. It’s probably more fun to be deposed by your wife’s lawyer in divorce proceedings.
Having sold off the premium auto group and now it’s Mazda holdings will leave Ford to mostly focus on the ‘Ford’ brand, that’s good. Back to product innovation instead of marketing theories.
It will be quite difficult for Mazda to continue as an independent company, given its small size and marginal market penetration globally (with Canada being a notable exception as the 3 dukes it out with the Civic for bestselling car). As a big fan of the brand, this saddens me. They could certainly use a strategic alliance, but it seems that the most desirable (and undesirable) North American, European, and Japanese dance partners are already spoken for. However, Mazda could singlehandedly elevate any Chinese automaker’s engineering game and would give said automaker a credibility boost in foreign markets.
HUH??, Every Market for Mazda worldwide has had around or over 35% growth (except USA), some Mazda models production has gone up 718% (CX-7), 200% CX-9…Mazda in Australia is their largest market % wise, bigger than Japan and US, next is New Zealand, Next is Europe. Mazda in China has a 33% growth yearly.
The Mazda 3 is Australia’s biggest selling privately owned model, even beats the Corolla, the Mazda 6 is the Class leader also, and Mazda 2 is not that far behind, last month 2 was no 1, and last month Mazda came in number 3 in sales in Australia, beating Ford Australia.
Mazda have a 8.5% market share down under.
Mazda are going extremely well, they are planing for even higher growth, new SKY 4 cyl engines that will achieve 4.2 litres of Fuel use per 100 kilometers in the new Mazda 6 in 2 years….that is almost Prius levels.
Popularity in Australia is not much of a harbinger for success globally, if Holden, Vegemite, Aussie Rules football, and assorted marsupials are any indication.
It’s really been in the last 5 years or so that Ford has finally integrated the best thinking of Mazda (small/fun cars) and Volvo (safety) into their global product lines.
Selling them off to keep the lights on played the larger roll, on a smaller scale – they just don’t need their expertise any more.
Um, how many of Ford’s major products were derived from Volvo and/or Mazda platforms in recent years?
Forgive me if I’m being stupid, but doesn’t this smell a bit like GM’s bizarre quest to dump Opel recently? Why dump all these “strategic partners” when half your portfolio derives from their products?
The Japanese auto industry are in dire need of consolidation. Mazda and Subaru, are still healthy at the moment, and their future product and technology portfolio is still looking good. Particularity with their Sky-G and Sky-D engines, new design team, and a strong focus on weight-reduction.
However, companies like Mitsubishi Motors are really looking in poor condition in every market. At the same time Mitsubishi is in excellent condition for EV vehicles due to the Mitsubishi Group’s global lithium-mining operations and big stack of cash. Also, Mitsubishi and Sumimoto are already joining up for a lithium mine in Boliva. Mazda (and their Mitsui, Sumimoto backers) would do good to consolidate these brands.
A combined cash powerhouse of Mitsubishi, Sumimoto, and Mitsui would also have the financial muscle to buy into foreign brands, especially with the incredibly strong yen. Moreover, these are companies with combined vertical infrastructure that would put Toyota to shame
I can well remember when Ford first bought into Mazda. Not long after, Courrier XLT pick-ups started populating the driveways of my neighborhood and high-school parking lot. They popped-up faster than mushrooms after a spring rain! IIRC (which I probably don’t), but the lease price (including maintenance and insurance) was something like 78 dollars/mo, and didn’t count against a supervisory employee’s lease car allotment; thus every dad ordered one as a third-car for their kids.
In my career, I was many times on the MC campus in Hiroshima (and plant in Hofu) even lived there for a short time, there are things that I designed cruising around in Mazda 3 and 5 vehicles.
So given the personal connections of the above I have seen it as somewhat sad that Ford’s share and interest in Mazda is waning.
I had a personal theory that the wide distribution of Ford’s shares to new owners, during the last big reduction, was driven by a strategy to support eventual reaccquisition after Ford’s finances were restabilized – Ford would buy these shares back at a given price, allowing the banks and insurance companies that had picked them up to sell them at a given price at a given time – so much for that theory.
So I have tried to think of the upside and the reasons behind even further divestiture…
Given that many of the top guys at Ford have served in officer (Booth, Fields, etc.) or other top (Jordan, etc.) positions, or have had extensive with MC program teams and product development (Grandinett, Kuzak, et al.) at Mazda, there sits a group of folks in Dearborn with a broad understanding of what Mazda the +/- related to Mazda holdings, product and production tie-ups.
Ford realizes that to be successful it needs:
1. To moderately, yet profitably, increase market share in its established markets (primarily US and W-EU, but also Brazil), and
2. To significantly (and yes profitably) increase market share in growth markets (this primarily being China, but also India and maybe Russia, etc.),
3. Catch-up and get ahead on advanced technology issues,
with the exception of #3, and probably not even here, Mazda is not really in a position to help Ford do more than it can already do on its own (same could have been said regarding VCC’s safety or green know-how, LR’s off-road know-how, or Jag’s, well whatever it is that Jag brought to the party.)
In the past Ford mostly leveraged its relationship to use Mazda as the development source for small-medium cars (323 gave us the US Escort/Tracer, FASPAC Tracer et al., Tribute gave the Escape/Mariner, M6 gave the Fusion/Milan/MKZ), and Mazda helped with orders for Navajos and US-B-Series. In addition, the JV’s AAI, AAT, CAFMM and CAFMA helped both parties share investment, development, expertise, supply, and economies of scale in small markets or entry into new markets (World B-Series/Ranger, Focus/M3). The product development topics are all things that a well-harmonized One Ford can well deliver using existing Ford assets. Ford should, however, remember to thank the relationship for these things as well as things that came out of the MC-Ford tie-up like DVP&R and GPDS as well as the M6 platform and MZR engine.)
So, I see this as a sign that Dearborn, thru One Ford, sees that with proper alignment and leveraging of global product and technology implementation plans, Ford design and production assets, it will be independently able to develop/maintain economies of scale, and be nimbler to market without having to work together with Mazda.
In addition, Mazda has its own problems. Mazda has been eternally hampered with too much yen-based production and export. When the yen is moderately strong this hurts profits, with it has been really strong (such as now) this can be life threatening.
By being able to devote its best minds to the development of the Ford business, rather than trying to manage the relationship to Mazda and all the unique and time-consuming issues related to it (product differentiation strategies, engineering and production-location integration, basic preferences in design, supplier-selection, business methods, etc.) Ford should be able to move faster and in its own best interest.
Everything has its time in the sun, and as the sun rises on One Ford, the sun must seemingly set on Ford-Mazda tie-up.
Thanks.
This was really informative…if depressing.
I liked the relationship and to me, this is a divorse that in no way can be good.
Not for Ford, not for Mazda.
I concur with TrailerTrash…the Ford/Mazda marriage spawned some really good products. Ford saved Mazda initially, and years later Mazda returned the favor…I still own my 15 year old example of that partnership. I was sad to hear of the sale a few years ago, and I am sad again with the “divorce”…
Another thanks – As a former owner of a 96 B3000 truck and current owner of a 03 Tribute with a 2L Zetec, the hook-up between the two companies will be missed, even though I tend gravitate toward Mazda’s made in the US offerings.
With Mazda’s rebadged Ford offerings you’ll find a greater percentage of them with row your own gears. Automatics predominate in the US, but it less so in the past with Mazda versus Fords.
Going forward – Mazda will be hard pressed to go it alone with producing models domestically in the US to mitigate exchange rate issues or the chicken tax on trucks.
Also, they have few dealers in the great in-between places major metropolitan areas. The latter is important to me – because I drive the wide open spaces where Bubba is your mechanic and the local parts house is more likely to stock parts in the store for a Ranger than a Toyota or a Nissan.
I was watching CNBC not 45 minutes ago(1:00pm mountain time) , and Ford was denying anything was happening.
Ford has been done with Mazda, functionally speaking, for awhile. The question is, is Mazda really done with Ford? I’m skeptical that they can go it alone at this point.
It doesn’t seem like Mazda dependent on Ford in any significant ways. At some point, Ford depended on Mazda far more than Mazda depended on Ford. The Fusion design started off Mazda’s Mazda 6 platform. The Euro Focus and Volvo S40 were based on older Mazda3. In its turn, Mazda depends on Ford’s Duratec V6 engine. I believe that’s the biggest of their dependencies on Ford tech. They would wean off this dependency by developing their own engine, or they could just keep on using the Ford engine. I am sure their current engine arrangement with Ford still stands.
C1, the Focus, M3, S40/50 triplets were developed on an ALL NEW platform by a cross-functional, cross-cultural, engineering team sitting in Cologne Germany. Based upon what I observed of the team dynamics, the Mazda played a fairly-submissive (even by Japanese standards) role in this undertaking.
I agree, there are some things that can’t change…yet.
The 6 is produced off the same line as the Mustang. How can this be and even end?
Perhaps the 3% is the minimum capital tie-up (from the Ford-side) required to make the AAT and AAI JV’s work, or continue to exist. (Since nobody knows what the JV contract language says…)
All of Ford’s chosen consolidated platforms, over the last few years have been either from Mazda or Volvo. Ford’s latest world wide quality control system is based on Mazda. I have no confidence Ford can continue to be successful with in house talent…or to be fairer…in house leadership. There is just too much of the old guard still in place and running the show…even as Mulally tries to right the ship.
I’ve got no longer got any skin in the game of Ford’s living/dying, but I don’t see it the same way (although there are still some real politicians and scheeming or ignorant numbskulls that I would broom out of the present operating level – but every organization has this.) If you had made this argument 5 years ago I might have been inclined to agree then. Given, however, the removal of organizational accretions built-up over the last 10 years, and the vastly simplified structure in the global Ford organization, I find it hard to agree with you.
I say good riddance (to Ford). Poor innocent Mazda was used, abused, and then tossed aside after Ford got what it wanted. Ford slyly encouraged Mazda to sink its development dollars into new platforms (2, 3, 6, CX-9), then used the fruits of Mazda’s labors to develop the Fiesta, V50/EuroFocus/Kuga, Fusion, XC60. What did Mazda get in return? Zero help with advertising and some secret standstill agreement to prevent it from selling the Mazda2 here for 3 years while Ford got its Fiesta act together.
Well if Mazda is too incompetent to avoid such unequal treaties perhaps it should just sell itself to Mitsubishi or Suzuki.
Ah, but without the intervention by Ford some 20 years ago, Mazda would nothing more than a distant memory.
Ford may have “used, abused and then tossed aside” Mazda, but only after rescuing it from the brink. Each had use of the other in one form or another.
Monty…
Sounds like a solid marriage to me!
Couldn’t they have stuck it out for the kids!?
Hyundaivirgin you apparently don’t the history here … Mazda would have been bankrupt several times over, or owned by another OEM, had it not been for Ford.
Story was that when Sumitomo bank wanted to dump its Mazda stock Toyota sniffed around but then objections of “monopolist” came-up (imagine GM having trying to buy Chrysler around 1979), so when Ford called, it was considered to be a true white knight by buying into Mazda…
Second time was when Mazda wanted to open a US luxury channel… would have been called Amati … but Mazda’s reach exceeded its grasp, and even though the vehicles were ready, they ran short of money and had to – at a very late stage – totally drop the idea. In the end, the vehicles were rebadged as Mazda senior series vehicles… this is where the Millenia came from… then Ford came with more capital and ended up with 33+% of the company.
Ford’s comingling of Mada into their products greatly improved my perception of Ford, beginning in the late 80’s with the Tracer, and continuing on through the 90’s. The Fords that were re-badged as Mazda’s, well, I was less impressed.
Personally, I’d like to see the relationship between Ford and Mazda continue. I think the benefits of having the Mazda technical influence, and the Ford scale is a good combination.
+1. Our Mazda-based Escort was the best of both worlds: Mazda tech, serviced and financed by Ford. If Ford can keep their eye on the ball then they may not need Mazda, but if their corporate culture hasn’t dramatically shifted they’ll be in trouble before long.
Monty is absolutely right. Both got their rewards. Mazda made money, and Ford re-learned how to make a decent product. It will probably be a happy ending for both.
I’ll never forget my amazement when I found out that my carpool driver’s POS Ford Aerostar 4wd had exactly the same power mirror adjustment controls as my 1984 RX-7. I heard stories over the years that the Ford Probe and RX7 had a lot in common, but never drove a Probe so I don’t know if that’s true.
Not RX-7 (which was built in the Hiroshima main plant (but not the one known as Honshu, or HQ plant) … on the same line as the MX-5 and (I forget the other car on that line…)…
Probe was based on the MX-6 platform and built in the AAI plant in Flat Rock (same one that produces the Mustang and Mazda6 (but these, despite the same plant, are definitely not on the same platform)…
Ah… the 626 platform… mother to the 626… the MX6… the Probe… and very nearly the Mustang (until Ford chickened out)… the Protege and still found underneath every Tribute and Escape out there.
Boy, did that thing make money for Ford/Mazda.