TOKYO (AP) _ Struggling General Motors Corp. will sell a 17.4 percent stake in Japan's Suzuki Motor Corp. for $2 billion, scaling down its share in an effort to gain much-needed cash, but the partnership between the automakers will continue, both sides said Monday.
GM _ which is embarking on a massive turnaround effort after losing $8.6 billion last year _ will maintain a 3 percent stake in Suzuki, dropping to seventh largest shareholder from top shareholder.
Suzuki, a Hamamatsu-based manufacturer of small cars, plans to purchase all of the 92.36 million Suzuki shares that GM will sell in a buyback program.
Suzuki shares, which have risen by about a fourth over the past year, inched down 0.4 percent to finish at 2,490 yen ($21) on Monday in Tokyo. Suzuki and GM made their announcements after trading ended in Tokyo and Suzuki said it will pay Monday's closing price for the shares.
Suzuki Chief Executive Osamu Suzuki said he wanted to lend a helping hand to longtime partner General Motors.
``We've been under support of GM for a long time, and this time it's our turn to help GM,'' Suzuki said at a news conference in Tokyo. ``I don't think the partnership is in deep trouble. It's just that GM needs help.''
Koichi Sugimoto, auto analyst with Nomura Securities Co., said the GM-Suzuki partnership was so critical for both companies that it was a wise move to keep it, and GM's decision to sell the shares was more rooted in a need for cash.
``They've had a relationship for a long time, and they need each other,'' he said, adding that the partnership with GM is important for Suzuki's global ambitions, especially in the U.S. market. ``Splitting up would have been negative for both sides.''
Troy A. Clarke, president of General Motors Asia Pacific, stressed there will be no other changes to the GM-Suzuki partnership, which dates back to 1981.
Suzuki will continue to hold its 11 percent stake in GM's South Korean subsidiary, GM Daewoo Auto & Technology Co. The GM-Suzuki joint venture production plant in Canada will also continue as will their cooperation in fuel-cell technology, Clarke said.
Clarke stressed the sale was not a sign of a decline in GM's interest in the Japanese market, pointing to Suzuki's continued distribution of Chevrolet cars in Japan.
``The strategic alliance with Suzuki will continue,'' he said in a telephone conference call in Tokyo, while declining to speculate whether GM would have preferred to keep all its stake in Suzuki if it didn't have its financial woes. ``It was a smart way to generate cash.''
Clarke said the decision for the sale, expected to yield a pretax gain of $550 million to $750 million, came at a GM board meeting last month.
GM has been struggling with U.S. market share losses, largely due to Asian competition, and has outlined a plan to cut 30,000 jobs and close 12 facilities in North America by 2008.
Suzuki has fared far better, expecting a 61 billion yen ($524 million) profit for the fiscal year ending March 31, as sales jumped 12 percent for the first nine months of the fiscal year from the same period a year ago.
Last October, GM said it was ending its alliance with Japanese automaker Fuji Heavy Industries by selling its entire 20 percent stake in the maker of Subaru cars. Of those shares, Toyota Motor Corp. of Japan, which has been reporting hefty profits, is buying an 8.7 percent stake in Fuji Heavy.
Over the years, GM had gradually raised its stake in Suzuki to 20 percent. Clarke said there were no plans to changes its 7.9 percent stake in Japanese truckmaker Isuzu Motors. Suzuki and GM will continue to work together on developing engines and supply products to each other, Suzuki said.
``We've got a great deal of benefit from the tie-up,'' Suzuki said. ``GM is our teacher in car-making.''