Suzuki: Share sell won't hurt GM ties

06 Mar 2006

1


The world's largest auto-maker GM, which is currently cash-strapped, has announced that it will sell around 17 per cent of its 20-per cent stake in Suzuki Motor Corp to the Japanese company. Earlier there had been speculation that the embattled auto giant would divest its entire holding in Suzuki. GM hopes to earn $2 billion from the sale.

The ailing auto-maker had been compelled to announce the closure of several plants in the US in a desperate bid to cut losses as Japanese small car makers have steadily eaten in to its market share in the US.

GM and Suzuki say that the stake sale will not affect business ties between the two companies. Suzuki says that it is willing to cooperate with GM, based on close relationship

The two companies jointly own a plant in Canada. In Japan, GM vehicles are sold through Suzuki's dealerships. They have jointly developed sub compact passenger cars, which are sold under the GM label.

In October last year, GM sold its 20-per cent stake in Fuji Heavy Industries Ltd. and there is speculation that it may also sell its stake in Isuzu.

The sale of its 17 per cent stake in Suzuki will leave GM with a pre-tax profit of around $550 million to $750 million because of sharp increases in Suzuki's share prices.

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