GM's sale of stake in Subaru maker part of broader rationalization

0 Comments | AFP, October, 2005

CHICAGO (AFP) — General Motor's sale of its stake in Japan's Fuji Heavy, maker of Subaru vehicles, is part of a broader rationalization plan in the face of declining market share and spiraling costs.

But the success of the plan is highly dependent on whether GM will be able to increase the profit margin on its decreasingly popular vehicles, analysts said.

"The sale of the stake in Fuji is a minor plus as far as their cash flow goes," David Healy, auto analyst with Burnham Securities, told AFP.

Healy said GM - which has lost more than a billion dollars in the first six months of 2005 after having posted record earnings in 2004 - faces a number of financial challenges.

Delphi, the largest US auto parts supplier, has reportedly asked GM for 6 billion...