CHICAGO – General Motors will end its alliance with Subaru-maker Fuji Heavy Industries of Japan and has sold 8.7 percent of its 20.1 percent equity interest in the company to Toyota for $315 million.
GM will then sell its remaining stake on the open market in Japan and could fetch up to an estimated $800 million in total.
Toyota’s interest in Fuji is its lithium ion battery technology, which Fuji is developing for use in hybrid vehicles, Toyota spokesman John Hanson said.
Lithium ion offers longer life than the nickel metal hydride batteries now in the Toyota Prius sedan and Toyota Highlander and Lexus 400h hybrid sport-utilities and soon to be offered in its Camry sedan, Hanson said.
Toyota, which holds a 45 percent share of the auto market in Japan, said it didn’t buy a greater stake from GM to avoid antitrust concerns in its home market.
GM denied that it ended the alliance because it needed cash. GM paid $1.3 billion in 2000 to acquire an equity interest in Fuji in order to gain access to the Asian market as well as four-wheel-drive technology for use in cars.
GM spokesperson Gina Proia insisted the decision followed GM’s regular review of its alliance partners and it was decided that “there weren’t enough collaborative projects or enough synergies to sustain the alliance and our assets could be better used elsewhere,” she said.
“This doesn’t exactly address the big $4 billion to $5 billion cash-flow deficit at GM this year and financially is a drop in the bucket, but GM needs to pay more attention to such things as health care, pensions and new product than to Subaru,” said Dave Healy, analyst with Burnham Securities.
Other than obtaining some cash for GM, Healy said the sale shows that “Daewoo is highly profitable and a far more important alliance partner, and Subaru really is irrelevant to the long-term, big picture.”
Subaru supplies Saab, which is owned by GM, with the 9-2X sports hatchback, a version of the Subaru WRX. Under contract, Subaru will continue to supply the car for 2006, said Saab spokesman Tom Beaman, but it’s not clear for how long after that.
However, both automakers have cancelled plans for Subaru to supply Saab with a seven-passenger crossover vehicle derived from the Subaru Tribeca that was to go on sale in early 2007.
GM owns a 20.4 percent stake in Suzuki, 12 percent in Isuzu and a 50.9 percent stake in Daewoo of South Korea, an interest that was increased from 48.2 percent in June.
Daewoo supplies Chevrolet and Suzuki with a line of subcompact cars sold under the Aveo name at Chevrolet and Verona, Reno and Forenza at Suzuki.
Daewoo, of South Korea, will supply GM with 1 million small vehicles to be sold worldwide this year. Isuzu, which recently pulled out of both upcoming Detroit and Chicago auto shows to conserve cash, is still vital to GM since it supplies it with high-mileage diesel engines for trucks.
Proia said no changes are expected in the relationships with those three alliance partners and in fact, Daewoo will be counted on more with the absence of Subaru.
—
(c) 2005, Chicago Tribune.
Visit the Chicago Tribune on the Internet at http://www.chicagotribune.com/
Distributed by Knight Ridder/Tribune Information Services.
AP-NY-10-05-05 2000EDT
Comments are no longer available on this story