Ford May Sell Mazda Shares; Sumitomo, Tata Motors Potential Buyers

Detroit, MI (AHN) - As the financial crisis deepens, the number of consolidations in the financial sector increased. Now it is the auto sector's turn as it faces billions of dollars of cash shortage to shore up its financial statement.

After reports said the cash strapped General Motors is in talks with Chrysler to merge, Detroit's third biggest motor company, Ford Motor Co. (NYSE: F), is drawing attention.

The company is planning to sell its controlling interests in Japan's Mazda Motor Co. to raise the necessary capital to avert bankruptcy risk as global financial crisis deepens.

Japan's trading company Sumitomo Corp. and India's Tata Motors Ltd. are considered as favorable buyers for shares from Ford, which has 33.4 percent of Mazda.

In addition, reports have indicated that the Dearborn, Mich.-based company may plan to sell a broad range of assets to preserve liquidity on declining auto sales.

The industry has already suffered due to slumping credit markets, high production cost and declining consumer spending in the country.

The US automobile industry reported the number of sales of trucks and SUVs plunged to a 15-year low as it declined by 27 percent last month.

Ford has initially acquired 25 percent stake in the Japanese automaker in 1979, but it increased its stake to provide Mazda with additional cash by purchasing more shares to the current level in 1996.

Mazda can prove to be a strong player for the potential buyers are it has emerged as Japan's fifth largest auto maker by sales volume by posting record profits over the last few years.

In July, Ford reported a record loss of $8.7 billion in the second quarter.