ANALYSIS / U.S. automakers may realign
Written by Writer on Monday, October 13th, 2008
ANALYSIS / U.S. automakers may realign
Hiroshi Ikematsu and Taro Koyano / Yomiuri Shimbun Correspondents
NEW YORK–Major U.S. automakers have been engaged in discussions that may lead to a realignment of companies in the industry, according to U.S. media reports.
It was reported that General Motors Corp. has been in negotiations to purchase Chrysler LLC and that Ford Motor Co. is considering selling its shares in Mazda Motor Corp., a Ford affiliate.
The ongoing financial crisis has worsened business conditions for U.S. automakers and the situation has the potential to cause a major realignment of the industry that also would involve Japanese manufacturers.
Cerberus Capital Management, a U.S. investment fund, holds an 80.1 percent stake in Chrysler and a 51 percent stake in GMAC Financial Services, which formerly was a GM financial service subsidiary.
Sources said that Cerberus had proposed to GM more than a month ago that it will hand over control of Chrysler in exchange for GM’s 49 percent share in GMAC.
Ford holds a 33.4 percent stake in Mazda. Sources said the U.S. company plans to sell off most of its Mazda shares to secure funds for its financial reconstruction.
Sales of U.S. automakers have been hit hard by the financial crisis. Their fund procurement has been hampered, and their stock prices have plunged.
Industry analysts said that U.S. automakers now must reconstruct their businesses through a major realignment.
Both GM and Chrysler produce mainly large cars, and some business experts doubt whether a merger would effectively boost business.
If Ford cuts ties with Mazda, which has technological advantages in manufacturing compact cars, the U.S. automaker’s development capability may be weakened, the experts said.
Even though Japanese automakers compete against their U.S. counterparts, they have cooperative ties with them. If the U.S. auto industry is drastically realigned, the impact on Japanese companies likely will be large.
Toyota Motor Corp. jointly produces compact cars with GM in the United States. Nissan Motor Co. and Chrysler have agreed to provide each other’s products under an original equipment manufacturer arrangement.
GM also has ties with Suzuki Motor Corp. and Isuzu Motors Ltd.
The New York Times reported that GM has a 50 percent chance of taking over Chrysler. If the negotiation fails, Cerberus likely will ask the Nissan-Renault alliance to buy Chrysler.
As the purchaser of Ford’s shares in Mazda, some economists predict that Mazda itself will buy the stocks, or it is possible that Japanese automakers and trading companies, as well as foreign automakers will be interested in buying the shares.
