General Motors Co. in talks to purchase major share in Isuzu Motors

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The Isuzu sign above an Isuzu Motors dealership.

Isuzu Motors' Japanese shareholders desire “independence.” (Photo Credit: CC BY-SA/Mj-bird/Wikipedia)

General Motors Co. has designs on acquiring Isuzu Motors. Reuters reports that GM had considered purchasing a controlling interest in Isuzu at more than one-third, which would have cost $3 billion. After the Japanese truck-maker noted that it wished to remain independent, GM reportedly scaled back its offer. Nikkei business daily notes that GM may now be seeking 10 percent.

Tapping southeast Asia

General Motors is seeking to strengthen its market share in southeast Asia, and acquiring Isuzu Motors would contribute toward that end. In addition, GM reportedly covets Isuzu’s recent developments in diesel technology. Isuzu would benefit from GM’s assistance in developing new hybrid technologies.

There was a time when GM and Isuzu would have shared technology freely. For 35 years, GM and Isuzu were equity partners. The U.S. automaker owned as much as 49 percent of Isuzu until it sold its last 7.9 percent share in 2006 for $300 million. The firms still cooperate in sales in Latin America and South Africa.

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New partnerships

Since emerging from bankruptcy restructuring in 2009, GM under the leadership of Vice Chairman Steve Girsky has begun to seek new alliances. In March, GM agreed in principle to obtain a 7 percent stake in French automaker PSA for $423 million. Last August, GM negotiated an electric car production contract with South Korean conglomerate LG Corp.

Baby steps for GM and Isuzu

Talks between General Motors Co. and Isuzu Motors remain in the preliminary stages at this point, according to a source close to the discussions who declined to be identified. It is known that Isuzu has discussed a potential partnership with Volkswagen, but no progress has been reported.

Isuzu’s Japanese shareholders currently own 33.4 percent of the company, giving them veto power. At Isuzu’s current share price, 33.4 percent of the company is worth about $3.2 billion.

General Motors’ rapid growth in China

Last year, GM managed to wrest the title of top-selling automaker in the world back from Toyota. Growth in the Chinese market was a factor. GM has targeted the remainder of the fast-growing southeast Asian automotive market, where Toyota and a host of other Japanese brands are dominant. Toyota currently owns 5.9 percent of Isuzu, as well as a majority of rival truck-maker Hino Motors. Toyota has not responded publicly to GM’s interest in Isuzu.

If the deal between General Motors Co. and Isuzu Motors is consummated, Isuzu will join the line of major Japanese truck-makers that are aligned with major strategic partners. UD Trucks, which was formerly Nissan Diesel, is allied with Volvo AB. Mitsubishi Fuso is currently a property of Daimler.

Sources

Finance Enquiry

Automotive News

ValueWalk


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