For $500 million, Ford Motor Co. is in the driver's seat at Mazda Motor Corp., boosting its stake from 24.5% to 33.4% and promoting Ford's Henry D.G. Wallace to become the first American president of a Japanese company.

But reversing Mazda's losses of more than $780 million between April 1993 and March 1995 (fiscal 1996 results will be announced in May), will be a steep challenge. Like other Japanese companies, Mazda retains nearly all of its workers, no matter how far car demand falls.

Look for substantial consolidation of product programs. Also, Ford will use its new leverage to bolster its own position in Japan, such as building more Ford vehicles in Mazda's Japanese factories, but sold with a Mazda badge.

"Mazda will continue to have its own independent product-development capability," says W. Wayne Booker, vice president of Ford's international automotive operations. "But we will be coordinating and developing a much closer plan in terms of product strategy. We will be cooperating in distribution of product throughout the world."

The partners have a pickup truck venture in Thailand. But Mazda has less of an Asian presence beyond its home market than other Japanese automakers.

Mr. Booker dismisses the notion that the investment is a bailout without which Mazda would go belly-up.

The need for cash "was not a factor at all," Mr. Booker says. "They obviously can use the cash and that is why we are buying new shares, but their balance sheet did not require the cash for them to continue to operate."