GM sounds out Isuzu on tieup in emerging markets

Kyodo, JIJI

General Motors Co. has approached Isuzu Motors Ltd. about entering talks on a capital tieup to produce commercial vehicles for emerging economies, sources said Sunday.

GM apparently wants to acquire a stake of about 10 percent in Isuzu, the sources said.

GM, which dumped its shareholdings in Isuzu in 2006 when it was grappling with financial troubles, is now interested in reviving the capital partnership in light of its rapid recovery, the sources said.

But whether an agreement can be reached is uncertain as Isuzu, which has now strong ties with GM rival Toyota Motor Corp., is being cautious about the offer, according to people familiar with the situation.

The U.S. automaker is expected to propose the investment to launch projects for commercial vehicles including trucks, mainly in emerging markets in Southeast Asia, where Isuzu commands a large market share, they said.

Isuzu plans to enter negotiations on the offer, which was apparently made last year, the sources said. GM had been Isuzu’s alliance partner for 35 years until 2006, when it dissolved the partnership because of a financial crisis.

GM is trying to reinforce its ties with Isuzu at a time when it is also seeking to expand its global presence amid the rapid recovery from its massive bankruptcy in 2009.

Isuzu, 5.9 percent owned by Toyota Motor Corp., is a leader in small trucks and pickup trucks with high-quality diesel engines. Isuzu and GM jointly developed and manufactured pickups when they were allied.

Despite the end of the capital alliance, GM and Isuzu continued to cooperate in some fields, including joint sales in Africa.

A deal with GM could substantially change Isuzu’s ties with Toyota, which acquired a 5.9 percent stake in Isuzu after the GM-Isuzu tieup ended.

V-shaped recovery


About 80 percent of the nation’s major nonfinancial companies expect both sales and profit to grow this business year and overcome the impact of last year’s disasters at home and abroad, a recent survey showed.

Their combined pretax profits are projected to jump 23.8 percent year on year to mark a V-shaped recovery from the 27.0 percent slump last year that was caused mainly by supply chain disruptions from the huge earthquake and tsunami that devastated the northeastern coastline in March, and by massive flooding in Thailand last autumn.

Among companies listed on the first section of the Tokyo Stock Exchange, the Jiji Press survey covered 245 nonfinancial companies that have released earnings reports for the business year ended in March.

The surveyed firms account for about 20 percent of first-section companies that close their books in March and 40 percent of the section’s total market value.

Of the 218 companies that have also released annual earnings projections, 174 forecast higher sales and either bigger pretax profits or smaller losses.

Mazda Motor Corp., game maker Nintendo Co. and the major shipping firms, such as Mitsui O.S.K. Lines Ltd., expect to swing into the black, while electronics maker Sharp Corp. anticipates a smaller loss.

Honda Motor Co. projects its pretax profit to jump 2.5-fold.

Those upbeat estimates seem to reflect optimism about the risks of a higher yen, a surge in crude oil prices and economic slowdowns in Europe and China.

“Companies are still cautious in their earnings projections and could revise them upward hereafter,” said Ryota Sakagami, chief strategist at SMBC Nikko Securities Inc.