Isuzu, Fuji Heavy in talks over future of U.S. venture

Isuzu Motors Ltd. said Tuesday that it is engaged in talks with Fuji Heavy Industries Ltd. on rationalizing the production of Isuzu sport utility vehicles at their U.S. joint venture.

Isuzu said in a brief statement, however, that no decisions have been reached on the matter. Isuzu issued the statement following a newspaper report that the firm would terminate the joint venture with Fuji, which makes Subaru vehicles.

The move will make it the first Japanese automaker to withdraw from direct production of SUVs in the United States, according to a report in the Tuesday morning edition of the Nihon Keizai Shimbun.

The report says that Indiana-based Subaru-Isuzu Automotive Inc., 49 percent of which is owned by Isuzu and 51 percent by Fuji, will become a wholly owned subsidiary of Fuji, while Isuzu will entrust Fuji with producing SUVs on its behalf.

Isuzu will also procure SUVs from General Motors Corp., its top shareholder, to sell under the Isuzu brand in the U.S., it says.

After pulling out of its money-losing SUV business in the U.S., Isuzu will focus on its truck business, in line with a three-year business rehabilitation program drawn up in August with the backing of GM.

Subaru-Isuzu was established in 1987, with the two firms sharing painting, metal-press and inspection systems while operating separate assembly lines. Their annual combined production stands at 200,000 units.

Fuji has been running its assembly lines at full capacity at the joint firm, due to strong demand for its Legacy cars.

But sales of Isuzu SUVs have been slumping, with the firm’s North American operations posting losses of nearly 20 billion yen annually since fiscal 2000.