TOKYO — Ford Motor Co. will assume virtual control of ailing Mazda Motor Corp., which has been battered by Japan's recession and the strong yen.
Mazda and Ford, in a joint statement today, confirmed reports that Ford would increase its stake in Mazda from 24.5% to 33.4% of the company's shares and that Mazda would voluntarily cede management control to the No. 2 U.S. auto maker.
According to the agreement, Mazda President Yoshihiro Wada will take the largely ceremonial post of chairman. He will cede direct control of the company to former Ford Venezuela President Henry Wallace, who became executive vice president of the Japanese company in 1994.
Wallace's appointment will mark the first time a non-Japanese has reached the presidency of a Japanese auto maker.
But the Ford-Mazda move itself is not unprecedented. General Motors Corp. has a larger share in Isuzu Motors Ltd.--37.4%--than Ford would in Mazda, and it has taken control of Isuzu's restructuring.
Trading in Mazda shares was suspended today in Tokyo on news reports of the impending changes.
The increased share alone does not give Ford control, but analysts said that coupled with the top-level management changes, it will in effect put the U.S. company in the driver's seat.
"This appears to be a strategic takeover of Mazda by Ford," said Peter Boardman, an analyst at UBS Securities Ltd. in Tokyo.
Even before the formal announcement, news of the change was being welcomed. Japan's trade minister, Shunpei Tsukahara, said Ford's plan would be "good for the world economy" in an era of economic liberalization.
Tsukahara said the Ford-Mazda move cannot be directly linked to the U.S.-Japan auto agreement of last year, which was aimed at further opening the Japanese market to foreign auto makers.
In recent years, Ford has been pouring cash and management expertise into Mazda, which has seen its sales sag significantly since the beginning of the decade. Ford bought about 25% of Mazda in 1979 and had maintained that level of interest since then.
"Ford has become very, very aggressive in Asia and especially in Japan," said Brian Heywood, managing director of marketing information company R&D/J.D. Power in Tokyo. "Mazda could also provide Ford with a good production base to supply lower-end cars to the rest of Asia."
Heywood said Ford may be considering an even larger corporate alliance in Asia that would include South Korea's Kia Motors Corp. Ford owns 9.4% of Kia and Mazda owns 7.7%, making them Kia's two largest shareholders.
Mazda said it would maintain a "distinct identity" and would continue to offer its own products through its own distribution channels.
But the companies said they anticipate a modest increase in the number of Ford personnel nominated to Mazda management positions. Presently, there are seven Ford-nominated directors on Mazda's board, four of whom have executive positions in Mazda.
Ford will spend $482 million to boost its equity stake in Mazda.
In recent years, Mazda's high domestic production ratio and dependence on exports have made it vulnerable to the strong yen, which makes Japanese products more expensive overseas.
Mazda's performance in the U.S. market has been dismal. Its U.S. sales in 1995 were fell 24% from the previous year. So far in 1996, its sales have been down 18% from a year ago.
The auto maker lost $380 million for the fiscal year that ended in March 1995. It was in the midst of a restructuring program to trim its payrolls to 26,000 workers by March of this year, for a total reduction of 4,000 jobs over three years.
Larger Japanese auto makers like Toyota and Honda have had better success in shielding themselves from currency fluctuations by aggressively moving production offshore.
But analysts said this could be a strong signal to the industry that streamlining is essential.
"From a symbolic point of view it's a wake-up call to auto makers like Nissan, which has been dragging its feet on restructuring," said Ed Brogan, an auto industry analyst with Jardine Fleming in Tokyo.