updated 10/11/2006 2:31:12 PM ET 2006-10-11T18:31:12

Ford Motor Co. said Wednesday it will try to sell a subsidiary that sells vehicle service contracts it bought for $180 million in 1999 as part of a now-abandoned diversification effort away from making autos.

The No. 2 U.S. automaker, facing a deepening financial crisis, said it wanted to sell Automobile Protection Corp., which offers service contracts for all makes of new and used cars through Ford dealers in the United States.

Ford, struggling with high costs and declining demand, has seen its cash position tighten this year. The company has said its automotive cash will fall to about $20 billion, including $3.4 billion in an employee healthcare trust, by the end of 2006 from $25.1 billion at the end of 2005.

The automaker, which is offering buyouts to all of its 75,000 U.S. factory workers and cutting 14,000 white-collar jobs, faces pressure from investors to take steps to raise cash to fund its restructuring.

Ford suspended its dividend in July and last month said it was looking to sell Aston Martin, its British luxury unit. It spun off rental car agency Hertz Corp. in December last year.

Analysts said selling APCO, which had been acquired under former CEO Jacques Nasser, would not make a substantial contribution to Ford's cash position but highlighted the direction that the automaker must take under newly appointed Chief Executive Officer Alan Mulally.

"It's frankly not a lot of money in the scheme of things," said Pete Hastings, vice president of fixed income at Morgan Keegan, on the potential sale of APCO. "Although it is nice to see them looking at the pieces of the business that don't fit strategically and looking to monetize them,"

The sale plan was the first strategic move announced by Ford since Mulally, a former head of Boeing Co.'s commercial airplane unit, took over as CEO Oct. 1.

Hastings said he hoped General Motors Corp.'s success in spinning off a majority stake in its finance arm would convince Mulally to reverse course for Ford and sell a majority stake its own finance arm, a deal analysts have said could raise $5 billion to $7 billion.

Ford purchased Atlanta-based APCO as part of Nasser's push into the services business. At the time, the company said the U.S. service contract business was worth $7 billion annually.

"APCO is a strong company that has performed very well, achieving growth in sales and revenue since its acquisition," Ford Chief Financial Officer Don Leclair said. "As a result of our ongoing strategic review, we believe it is prudent now for us to consider a sale of APCO."

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