By on April 29, 2012

Here some background on the GM/Isuzu tie-up. Japanese wire services such as The Nikkei [sub] and Jiji report that GM approached  Isuzu and “informally proposed acquiring a stake” in the Japanese truck maker. The source is an unnamed executive of Isuzu.

According to The Nikkei [sub], GM and Isuzu will start negotiations in early May for a roughly 10 percent share. If the negotiations are successful, Isuzu President Susumu Hosoi and GM CEO Dan Akerson could meet this summer to sign the agreement.

Holding a 9.2 percent share, Japanese trading house Mitsubishi is the largest shareholder of Isuzu. If the talks are successful, that title will pass to GM.

Isuzu and GM go a long way back. In 1971, General Motors purchased a 34.2 percent share of Isuzu. Isuzu’s KB pickup truck was sold through GM dealerships in the United States beginning in 1972. More light trucks were added.  Isuzu also produced the luckless  Chevrolet LUV  from 1972  through 1982.

In 1974, Isuzu built the Opel Kadett under the Isuzu nameplate as the Bellett Gemini. In 1976 GM imported the Gemini into the United States as the Buick Opel. Few knew that the German car, sold through GM dealerships, was actually manufactured in Japan.

In 1999, GM had 49 percent of the company, effectively gaining control of the company. One of GM’s strategic planners, Donald T. Sullivan, was installed as executive vice-president of operations. No Japanese manufacturer had ever involved a non-Japanese speaking manager in such a high position before.

Shortly thereafter, the romance began to sour. In 2002, Isuzu started to buy back its shares from an increasingly cash-strapped GM, reducing GM’s 49 percent share to 12 percent.

Then, things get a little murky. The official history timelines are mum in regards to GM’s final disengagement. “Due to financial difficulties, the United States’ GM sold its 7.9 percent stake in Isuzu in 2006,” says the Yomiuri Shimbun. Shortly thereafter, Toyota bought a 5.9 percent share in Isuzu.

Isuzu will have to evaluate GM’s advances carefully, because a lot is at risk, and there is more than one knot that needs to be untied. “A reforging of ties between the two could trigger a response from Toyota,” says the Nikkei. Translation: Toyota will most likely dump the stock. Isuzu will also end capital tie-up talks with Volkswagen . According to Japanese media, Isuzu still hopes to supply pickup trucks to Volkswagen in Thailand, where they will be sold as VWs.

Judging from the high-level leaks to sympathetic Japanese business wires, some executives at Isuzu might not be too excited about the rekindling of the romance. As part of its default, GM has stiffed Isuzu with bills of $1.7 billion, some people say. As it turns out, the on-line sources confused  1.7 billion dollars with 1.65 billion Japanese yen ($20 million.)

 

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25 Comments on “GM And Isuzu Want To Rekindle Old Tie-Up...”


  • avatar
    Educator(of teachers)Dan

    Thank you for some back story Bertel, tip of the hat to our man in Southeast Asia as always.

    On a slightly related note… Headline good, picture to go with headline, fail.

  • avatar
    "scarey"

    Isuzu might want to reconsider. GM’s effect on them was as disasterous for them as was the federal government’s effect on the idea of balanced budgets. They had a good product line- Trooper, Rodeo, etc., and somehow were reduced to selling rebadged S-10 pickups and not much else. I would welcome Isuzu’s return to the U.S. market, but such inept, destructive associations may result in a similar outcome for Isuzu as Gm gave to Saab.

    • 0 avatar
      highdesertcat

      I agree that Isuzu may want to reevaluate another liaison with GM in the future. The fact that GM approached Isuzu with this deal speaks volumes in that GM wants to diversify its holdings and investments globally and reduce its vulnerability and risk of another financial collapse and bankruptcy in the future.

      In spite of what the GM fan club members keep telling us, GM is not a viable and self-sustaining auto manufacturer at this time. I know about all the numbers, the so-called profits and the estimated forecasts of increased sales and profits when the new models come out.

      It’s always about the future. It was about the future in 2007 as well, and we all know what happened in 2008, and 2009, right?

      But when you cut right to the nitty-gritty and add up the numbers on the bottom line, GM is nowhere without the financial assistance of the US tax payers, the IRS, the PBGA and the rental fleets. Captive owners AND captive buyers. Such a deal!

      The flip side is that GM is speculating with tax payer money and not assuming any risk of its own. Good for GM. Not so good for the tax payers. As long as there are tax payers, “GM is alive” and owned by we, the people. Too big to fail.

      Gambling with other people’s money. Priceless!

      • 0 avatar
        carbiz

        Captive owners and buyers? Are you sure your aren’t talking about Toyota and their 1.5M guaranteed buyers in Japan every year?
        The U.S. government (and Ontario/Canada) are now ‘investors.’ They could sell their shares any time they want. The fact that they would lose money if they sold today is another issue entirely. If Americans stopped by imported products of all types, and American companies stopped exporting jobs to basket case south Asian countries to reduce costs, the U.S. might recover a few jobs, employment would soar and GM stock might double.
        I know: I’m dreaming. It’s God-given that the Sonata and A4 are available for purchase.
        As long as the money markets don’t implode again and the U.S. auto market doesn’t halve again, GM will do just fine.
        Unless, of course, you are HOPING GM goes under finally, just so you can gloat………..

      • 0 avatar
        highdesertcat

        carbiz, now that we, the people, are owners of Government Motors I want them to survive and do well so that GM can pay us back the $50B we stuck in them.

        But I don’t think it is going to happen without another taxpayer-funded bail out in the 2015/2016 time frame GM will once again go under. The sales and market share just aren’t there for GM. Not here, not abroad. And GM has serious problems overseas.

        I used to own several blocks (of 100) GM shares prior to 2008 but received enough sage advice to dump all my US-auto stock in the 2007-2008 time frame. Made money at it. Many did not.

        What I am talking about with ‘captive owners and captive buyers’ is that we, the people, are now the owners of the failed GM enterprise and we, the people, had no choice and no say in the matter to bail out GM and Chrysler. Bush started it and Obama took it over the top.

        I thought it was a mistake and I still think it was a mistake because if you compare GM to Chrysler, which we dumped on Fiat with a $1.3B bribe for them to take Chrysler, you can see for yourself how well Chrysler, now foreign-owned, is doing.

        Shopped for a Jeep Grand Cherokee lately? They sell at a premium, don’t you know. More tacked-on dealer options than Carter has little liver pills and people are willingly paying for them.

        And as far as the captive buyers are concerned, you must be aware of the special arrangements GM has with the various rental car companies, federal and state government agencies, to supply GM vehicles to them every year. Vehicles formerly manufactured by Chrysler and other car makers (like Ford).

        The number of foreign-brand cars supplied to fleets has dropped while GM fleet sales have increased significantly. The same thing happened when Chrysler was in deep financial trouble when Iacocca was in charge, and it also happened during the years leading up to the demise of AMC. Captive customers! Buy Chrysler, or else! Buy AMC, or else! Now it’s Buy GM, or else!

        As far as the foreign companies are concerned (not including Fiatsler) Hyundai/Kia is doing great because they put out a better product and give buyers the biggest bang for the buck.

        Toyota does alright in spite of the concerted effort by Ray LaHood and the US Congress to libel and discredit ToMoCo with false and fraudulent claims.

        In the end there was nothing to the allegations although the damage was already done — all to sell GM cars. But the bigger threat to Toyota and Honda has been the disasters they’ve had to deal with overseas.

        Nissan, under Ghosn, has made a remarkable turn-around and puts out popular products. Even Ford has made great strides under Mulally and is the only American car maker still standing with a better than even chance for survival.

        The US economic policy is what drove American manufacturers to outsource, and foreigners set up plants in America to avoid the various penalties levied on imports.

        Until that policy changes there is no incentive for manufacturers to open plants in the US. That’s why they go to Mexico and use NAFTA to their advantage.

      • 0 avatar
        28-cars-later

        Very interesting commentary Highdesertcat. I’m not sure GM is headed for another bankruptcy but I do see little room for growth outside of Daewoo/Buick sales in China and perhaps some increased sales in Brazil, and in this game its grow or die. GM, Chrysler, and to a lesser extent Ford were all victims of the fruits of NAFTA and GATT treaties in the nineties which allowed for US industry to be decimated to begin with… depending on the political circumstances in the 2012-2016 time frame I think a healthy dose of protectionism is in order if any US manufacturing is to survive. Union non-sense aside here in the US, China has access to virtual slave labor with no legal entanglements in the form of ‘rights’ and artificially cheap raw materials, we simply can’t compete. I’m generally against gov’t intervention in markets but prior to the Fiat bribe, I would have said slap a 5K tariff on every car manufactured by a > 50% foreign owned automaker regardless of its assembly point. This wouldn’t stifle high end sales a bit but it would surly drive up the costs of lower end models and force the competitors to eat their profits or raise costs. I really don’t see how else US industry can be competitive otherwise, thirty years of losing market share has demonstrated those customers aren’t coming back on their own. Oh and while were on the subject, slap some tariffs on Apple as well, its a bit ridiculous to me how this company can create -in the grand scheme of things- such meaningless products and get away with something like a 200% markup over cost on the Iphone built in foreign lands. We’re trillions of dollars in the hole and even stabilizing the federal budget is going to require the return of some industries, ‘service’ jobs aren’t going to cut it.

      • 0 avatar
        highdesertcat

        28-cars-later, very well articulated! I think that MOST Americans, at least the non-union types, would agree with your position here.

        Know that I am not against unions, far from it. My dad was a union man until he became Civil Service as the chief-electrician at an Air Force station.

        But even my dad turned against unions because the concept of protecting and abusing the workers had been so badly fornicated in favor of ever escalating pay and benefit increases, and task limitations, that unions often bargained themselves out of work by driving their employers into financial ruin.

        Much like what we saw with American auto and the UAW that successfully managed to collectively bargain many of their members into early retirement or out of a job. Job bank anyone?

        Obviously the UAW preferred for their members to lose their job over working constructively with their employers to achieve a level of achievable profitability and sustained existence.

        Ah, but what the hell, there’s always the tax payer who can bleed red and keep the UAW living large and enjoying the high life.

        If anyone is going to bail out anything, bail out a money-making entity like banks and mortgage houses, not a consistent money-losing auto manufacturer that is renown for its inferior vehicles that had parts falling off and were designed for obsolescence.

        Some would say that Isuzu would benefit from another tie-up with GM, but I think that Isuzu would derive a greater benefit from tying up with Toyota to a larger degree.

        Regardless, GM has serious problems of their own and tying up with Isuzu would benefit GM by reducing its vulnerability and lessen the effects of financial turbulence of GM’s problems in Europe and China.

        Were GM to fail again for any number of financial circumstances in the future, there is no doubt in my mind that the US government, regardless of who lives in the White House or who controls the houses of Congress, will gladly and exuberantly bail out GM once again.

        But this time not for the UAW, although they will be the beneficiaries. No, this time around it will be for national pride because once Obama made the decision to go whole hog on the GM bail out, we were in for a penny, in for pound.

        To do otherwise would be to admit that the initial national policy of bailing out failed industries was a mistake. And if America is to remain the leading world-economy and world-protector, we cannot be associated with an admitted failure.

    • 0 avatar
      TheHammer

      They HAD a good product line in the pre 1992 Isuzu Trooper. Though it was a crude rust bucket, people loved it. The re design was way too expensive. And don’t forget their solid car line. Impulse and Stylus lol

  • avatar
    Robert.Walter

    I seem to recall that prior to the disengagement, something happened like GM gave a plant to ISUZU to manufacture the Duramax engine in … somehow Isuzu failed to keep up with its mortgage payments, and thus the plant, and the engine line, and the IP was transferred to GM. Something like that…

    Re. “In 1976 GM imported the Gemini into the United States as the Buick Opel. Few knew that the German car, sold through GM dealerships, was actually manufactured in Japan.” Worked so well that before long, GM was putting Chevy engines in Oldsmobiles without informing the buyers.

    • 0 avatar
      carbiz

      Newsflash: GM could have put 8 hamsters in a cage under the hood and 90% of the buyers wouldn’t have known/cared. Only a few bored auto writers cared then or continue to care today.

  • avatar
    doctor olds

    @scarey- GM was the best thing that ever happened to Isuzu as well as Saab.

    • 0 avatar
      "scarey"

      I agree…if we assume that they were into suicide, that is.
      If that was NOT a joke- please explain your reasoning. The best and the brightest want to know.

      • 0 avatar
        tonyola

        Saab was already a dead brand walking when GM took over. They had nowhere to go but down.

      • 0 avatar
        moedaman

        “Saab was already a dead brand walking when GM took over. They had nowhere to go but down.”

        Exactly right! I’m not a big fan of GM, but if it wasn’t for them, Saab would have been dead 10 – 15 years earlier. Buying Saab actually made GM worse off. With a little intelligence, Opel could have moved into the spot GM wanted Saab for. Exporting Opels around the world instead of wasting money on Saab would have made both GM and Opel stronger.

      • 0 avatar
        28-cars-later

        Agreed, Saab was a huge distraction and should have died in 1989, just as Saturn was another resource drain and should have died in 2002 with the basic SL design.

  • avatar
    Dave M.

    GM – the Kevorkian of auto partners.

    Isuzu needs to run far and wide. The most untrusted part of my high-mileage Trooper is the GM 4L30E transmission. They last around 60k and are very expensive to fix. Repeatedly.

    • 0 avatar
      carbiz

      …. then the issue is either the 4L30E is mismatched or mis-programmed, not the transmission itself. Back in ’97 my ’91 Caprice went to its grave with its original transmission and 160,000 miles on the clock. You have no idea how many times I buried the back bumper in mud or snow and ‘rocked’ that early generation 4 spd electronic transmission out of the hole. Or 70 mph through the Tennessee mountains with my 3,400 lb Bayliner behind me….

  • avatar
    alluster

    A 10% share in Isuzu will cost GM $1B. $500 million more will get them 51% or a controlling stake in Mazda. GM could use Mazda’s dealer/distribution network in Japan while Mazda could use much needed production capacity in North America and Europe. Isuzu does have a huge presence in Japan, south east Asia and great diesel engines that sell about 22 million a year. Will be interesting to see if the deal goes through. For GM, this deal could be all about breaking the competition. Toyota will stand to lose if it goes through. Isuzu has already shelved plans to develop a small diesel for Toyota. With the Yen climbing again to less than 80 a dollar, Isuzu would be desperate for capital and may sell their stock to GM under market value, just like PSA sold their 7% to GM.

    GM sales in south east asia have more than doubled since last year and are on target to reach 10% market share within 3 years. They need to partner with someone who has an established presence to grow beyond that though i believe GM is better off buying them outright, either PSA or Isuzu. Part ownership’s take years to materialize if ever. Just buy up Isuzu and fold them in to GM, like Daewoo and change the name to GM-SEA.

    • 0 avatar
      geozinger

      While I like the line of thinking that GM could solidify it’s SE Asian engineering capabilities by investing in Isuzu, I don’t understand the emphasis on gaining market share in Japan.

      Japan, while an important market, is a mature and relatively small one. It would make sense to partner with someone to develop market share there, but not to focus a lot of energy on it. I’d think that GM would concentrate on Indonesia, India and China, for example. These seem to have markets that are huge (potentially if not actually) and skew younger demographic characteristics.

    • 0 avatar
      28-cars-later

      7%? 10%? Honestly I think GM would be better off sinking its speculative investment money into Exxon Mobil, Chevron, and Conoco Phillips. If you see an opportunity to gain market share through a buyout or controlling stake I could see it, but they’d be smarter to park that money into a growing industry.

  • avatar
    NulloModo

    The original article mentions the deal is for commercial vehicles, which makes some sense for GM to get in bed with Isuzu for. Isuzu absolutely dominates the market for Low Cab Forward medium duty trucks. GM used to rebadge them as W-Series, and Ford halfheartedly got into the game rebadging Internation varieties for a few years, but Isuzu has been the big player (with Mitsubishi Fuso playing a smaller role, but still larger than any of the domestics have been able to carve out).

    Isuzu’s passenger vehicles in the US haven’t been well accepted, but their commercial line is popular, and leveraging that with increased production capability from GM could be a smart move.

  • avatar
    minneapolis_lakers

    Isuzu should stay as far away as possible from GOVERNMENT MOTORS.


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