Cash-strapped General Motors Corp (GM) today said it sold the remaining 3.02 per cent stake in Japan's Suzuki Motor Corp on the open Tokyo stock market for about $230 million. This was immediately followed by a statement from Suzuki that it will buy back an equivalent amount of shares before the stock markets open tomorrow.

GM said the move was "based on a mutual agreement," while the Japanese compact-car maker said it was mindful of GM's need to secure funds as it reels from a slump in auto sales in its major markets and high operating costs. Suzuki will finance the acquisition from its cash reserves.

The US auto giant said the agreed price matches Suzuki's closing share price in Tokyo Monday of ¥1,363 ($14.03) a share. That is nearly 5 per cent below the stock's 25-day moving average, and less than half it's high for the year. The buyback transaction will take place ahead of the opening of regular trading in Tokyo tomorrow.

GM and Suzuki work together on developing hybrid and fuel cell technologies. They also jointly own a Canadian manufacturing operation and share purchasing and cooperation on entering emerging markets.

"We highly value our strategic relationship with Suzuki," GM CEO Rick Wagoner said in a statement." This action will have no impact on our existing bilateral business relationships." But the deal means GM, which warned earlier this month it could conceivably run out of operating cash by the end of the year, is exiting Suzuki for the first time since it invested in the Japanese company in 1981.

"We fully understand the necessity for GM to raise cash," Suzuki chairman and chief executive Osamu Suzuki said in a statement. He said he was in close contact with Wagoner, and the two companies would keep joint projects, including the development of hybrid vehicles and a joint venture for sports utility vehicles in Canada.

GM's pullout comes after weeks of speculation in Japan that Ford Motor Co. may be considering cutting its 33.4 per cent stake in local motor maker Mazda Motor Corp. in a move to bolster its own finances. Both Ford and Mazda have brushed aside speculation over the stake, valued at over $800 million, saying they expect to retain strong ties. (See: Tatas in the running for Ford's proposed Mazda stake sale)

In more prosperous times earlier this decade, GM owned over 20 per cent of Suzuki; but like all auto makers, it has been squeezed by an industry slowdown and sagging economic growth in major economies. GM is struggling to avoid bankruptcy as the global economic crisis puts people off buying cars. Shares in the automaker plunged recently after a Deutsche Bank analyst forecast they would be worthless with a year. (See: GM staring at bankruptcy while US lawmakers pledge support)

Earlier this month, GM reported it lost $2.5 billion in the third quarter and said it is seeking $5 billion in cost cuts, as well as new financing from banks, private investors and through a government rescue. It also warned that it's loss making third quarter had left it with only a thin cushion between its current cash reserves and the minimum funding requirements for day-to-day operations. (See: General Motors seeks state aid to avert collapse)

A GM spokesman on Monday declined to say what exactly the company plans to do with the $230 million, and couldn't say whether the sale would result in a capital gain.

GM's stake in the Japanese company fell to 3.02 per cent after it sold a 17 per cent holding in 2006 to raise cash for restructuring. Both parties said Monday that despite GM's sale, the US automaker could return as a Suzuki investor at some point in the future. (See: Suzuki: Share sell won't hurt GM ties)