Ford Takes Greater Role in Troubled Mazda Motor

THE JOURNAL RECORD, December 28, 1993 | Go to article overview

Ford Takes Greater Role in Troubled Mazda Motor


TOKYO (AP) _ Weakened by Japan's recession and the resurgent Big Three automakers, Mazda Motor Corp. sought Ford Motor Co.'s management help Monday, a move that reflects a reversal of fortune in the intensely competitive automaking industry.

Ford, which has held a minority stake in Mazda for 14 years and once took lessons from Mazda's management, will take a bigger hand in operating Mazda by appointing a vice president and other officials. There was some speculation that Ford eventually could increase its 24.5 percent interest.

The decision comes against a backdrop of rising trouble in Japan's once pre-eminent automotive industry, where the news nowadays is stagnant sales, layoffs, production cutbacks and plummeting profits _ similar to the pain that the U.S. automotive industry endured through much of the 1970s and 80s.

Detroit, meanwhile, is in the midst of a renaissance, helped partly by the high prices of Japanese cars in the United States and the Americans' own record of improving reliability and quality. Success stories range from Ford's Explorer four-wheel drive to Chrysler's sleek LH sedans.

Although American cars have yet to achieve any significant sales in Japan, sales of U.S. vehicles in the United States have been increasing at double-digit percentage rates. The United States is expected to overtake Japan this year as the world's biggest vehicle producer for the first time in 13 years.

Mazda, which produces cars like the 626 sedan, Protege compact and MX-5 Miata sportscar, expects to lose 32 billion yen or $288 million this fiscal year, vs. a profit of 2.6 billion yen last year. It is forgoing a dividend for the first time since its stock was listed in 1949.

"Mazda has been going through some very difficult times, the red ink continues to spread and deepen," said Chris Cedergren, an analyst at the AutoPacific Group, a consulting and research firm in Thousand Oaks, Calif. "Ford wants to get more involved so it can help Mazda weather the storm."

Cedergren called Ford's increased involvement a "situation where Ford is helping from a management standpoint, maybe from a watchdog standpoint too. Who knows, this might even lead to an increased equity stake."

Mazda President Yoshihiro Wada said the agreement with Ford would improve long-term cooperation between them in development and production of cars.

"It's not just for the benefit of one side. …

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