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Isuzu to Withdraw From SUV Venture

October 25, 2002

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TOKYO (AP) _ Japanese truckmaker Isuzu Motor announced Friday it plans to withdraw from a joint venture making sport-utility vehicles for North America as part of its broader effort to improve its profitability.

Isuzu, which is 48.5 percent owned by U.S. automaker General Motors Corp., said it will sell its entire 49 percent stake in the SUV-making joint venture, Subaru-Isuzu Automotive Inc., to its partner Fuji Heavy Industries, also a GM affiliate.

The sale, which will take place early next year, will give Fuji Heavy sole ownership of the plant in Lafayette, Ind.

Isuzu’s announcement, part of a broad three-year overhaul plan aimed at restoring profitability, means the Tokyo-based company will now stake its future on its truck business. Truck sales in Japan have slowed amid the country’s decade-long slowdown.

The changes are expected to leave Isuzu with a smaller presence in North America, the world’s biggest auto market.

Although Isuzu will no longer make SUVs, the three models _ the Rodeo, Rodeo Sport and Axiom _ will continue to be made with the Isuzu logo under a contract with Fuji Heavy, the company said. Isuzu expects to sell 30,000-40,000 SUVs a year in North America starting next year, down from more than 100,000 units.

Isuzu also plans to stop exports of their domestically-produced Trooper SUV to North America, but will continue to export it other nations, Isuzu spokesman Koitsu Mabuchi said.

Meanwhile, Isuzu said GM has agreed to cancel its 619 million Isuzu shares _ estimated to be worth about 29 billion yen ($235.77 million) _ and buy about 10 billion yen ($81.30 million) of newly issued Isuzu stock. After the transaction, GM’s stake in Isuzu will shrink to 12 percent.

GM Asia-Pacific vice president Basil Drossos and Japanese bank Mizuho’s managing executive officer Shigeki Toma will become Isuzu’s executive vice presidents.

Isuzu also on Friday revised its financial forecast for the current fiscal year through March 2003, saying it now expects a loss of 170 billion yen ($1.38 billion) on sales of 1.27 trillion yen ($10.33 billion). The company had previously predicted a profit of 3 billion yen ($24.39 million) on revenue of 1.37 trillion yen ($11.14 billion).

Isuzu also said it will book an extraordinary loss of 140 billion yen ($1.14 billion) in the current fiscal year. Of that total, restructuring of U.S. operations will account for 91 billion yen ($739.84 million).

The company said it expects restructuring steps to pay off next fiscal year, boosting profit by about 60 billion yen ($487.80 million) annually. Its U.S. operations could be posting operating profits later this fiscal year, Isuzu officials said.

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