Struggling US car manufacturer Ford is to sell its controlling stake in Japanese firm Mazda in a bid to raise cash and stay afloat.

Ford is to sell about two-thirds of its 33.4 per cent stake for around $538m to Mazda and more than 20 undisclosed Mazda business partners.

Slowing auto sales and the global financial crisis have sent shares of Ford plunging and led to a worse-than-expected $2.98bn operating loss in the latest quarter.

But it will remain the Japanese car maker's biggest shareholder with a 13.8 per cent stake.

News of the sale came a day after General Motors (GM), another US car giant, said it would sell the remaining three per cent it held in Suzuki for $232m, in an effort to shore up its fast-dwindling cash reserve.

Reeling from the worst slump in US car sales in more than two decades, Ford, GM and the other "big three" US car manufacturer, Chrysler, are desperately trying to raise cash to stay solvent.

On Tuesday executives from all three pleaded with the US congress for $25bn in aid to save their businesses, warning that their collapse would cause "catastrophic" damage to the already ailing US economy.

Their call though was given a sceptical reception, with politicians questioning whether the struggling car giants would be able to pay back any loans, or if the money would simply be used to "perpetuate failure."

Since taking control of Mazda in 1996, Ford has pulled the Japanese carmaker back from the brink of collapse while Ford has benefited by tapping Mazda's strength in the development of smaller cars.

The two companies, which share vehicle platforms and engineering resources and jointly own assembly plants in the US, Thailand and China, said they would maintain their strategic ties, and analysts agreed that there would be little change in their co-operation.

Ford shares dipped to a 26-year low of $1.70 on Tuesday before recovering to close at $1.73 while Mazda's shares were 1.6 per cent higher on Wednesday.