Chrysler Sells Off Almost Half of Its Stake in Mitsubishi

DETROIT —  Chrysler Corp. said Friday that it cashed in nearly half its stake in Japan’s Mitsubishi Motors Corp. for $592 million, but industry analysts said the business ties between the two auto giants were unlikely to change much.

Chrysler sold 75 million of its 168.9 million shares of MMC to Japanese financial institutions, which already owned some of the Japanese auto maker’s stock.

The sale reduced Chrysler’s stake in MMC to 12.1% from 21.8% of the outstanding shares. But Chrysler remains the second-largest shareholder after Mitsubishi Heavy Industries, which has 28.4%, a spokesman for Mitsubishi Motors in Tokyo said.

Chrysler first invested in Mitsubishi in 1971 and has gradually expanded the ties between the two companies, from distribution to joint work on product development, component purchases and, most recently, manufacturing with Diamond-Star Motors, a joint venture, in Normal, Ill.

Weakening Domestic Market

Chrysler said the sale amounted to about 45% of its shares and resulted in a net profit of $310 million, or $1.33 for each share of Chrysler stock. On Friday, Chrysler stock closed 25 cents higher at $25.50 in New York Stock Exchange trading.

Industry analysts said Chrysler needed the funds to cope with a weakening domestic market and shrinking profits.

“I think it means that Chrysler needs the money,” said Steve Usher at Kleinwort Benson International Inc. “I don’t think there’s much more to it.”

Joseph Phillippi at Shearson Lehman Hutton Inc. said Chrysler could use the cash infusion to bolster its ambitious plan to spend $15 billion on product development over five years. “Chrysler must aggressively invest in its infrastructure” to remain competitive, he said.