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Discussion Starter #1
GM appears to be scrounging for money wherever they can, even at the risk of cannibalizing future income.

Stake in Subaru - SOLD
Stake in Isuzu - SOLD EDIT: $300 million for 7.9%
51% of GMAC - SOLD
85% of stake in Suzuki - SOLD - leaving 3% stake
 

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this is a GREAT thing for the company....make the company smaller and easier to manage, obviously they have proven that they can't manage a HUGE company....hopefully they can a normal sized one
 

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Discussion Starter #4
Is selling their stake in Izuzu such a bad thing really? What have they done lately?
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Pretty much all of GM's diesel engines, a strategic alliance which shall continue.

They also make pickup trucks for the global market.

These minority stakes should not create management complexities, as they should be independent self-managing entities. The GMAC stake will dilute earnings, possibly widening losses.
 

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Isuzu was the manufacturer of the Duramax diesel engine. The best thing that ever happened to the GM HD pickup line.

I too would be curious to see how the ratings on those sold-off companies are affected.
 

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this is a GREAT thing for the company....make the company smaller and easier to manage, obviously they have proven that they can't manage a HUGE company....hopefully they can a normal sized one
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Owning a stake in a company doesn't make your company even larger. It's a win-win if done properly. They do their own thing and you do yours. You just get a percentage of the earnings at the end of the year. GM never "managed" Isuzu or Subaru, they are very much independent companies, but at the end of the year they sent GM some nice checks. And when needed they can lend a hand in their respective areas of expertise, somethign GM exploited with Isuzu diesel engines, but it never did exploit Subaru's knowledge and expertise as it should have.
 

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Also, keep in mind the American tax system gives preferential treatment to corporations receiving dividends from other corporations. They get to write off 80% off the dividend right off the top for tax purposes. This makes that revenue more valuable to the company.

Novs, do you have an article about the $100 a year payment? I'm curious if that's considered to be GM's 49% share of profits, a payment for the 51%, or some other royalty payment.
 

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You guys are still forgetting about exchange rate volatility which is surprising considering this deal was in Yen. The Yen has been weakening against the USD for the past year. A year ago $1USD = 105YEN whereas today its $1USD to 118YEN. That is a HUGE change.
 

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You can find most of the article here, the rest is at automotive news but you have to register for it. What I get out of it it's what they're getting annualy from the 51% sale, I may be wrong though.
 

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Discussion Starter #12
Actually it is an annual licensing agreement, which means to me that 51% of GMAC has a net income of well over $100 million a year if they will pay $75 million for an exclusivity agreement for promotional financing and another $25 million expected a year as a commission.

While GM is getting $100 million, they are also technically paying $49 million of it from the bottom line of a subsidiary that used to be wholly owned by them.
 
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