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GM plans to sell stake in Isuzu

Imported cars are loaded onto a car carrier at a port facility in Bayonne, New Jersey, on Wednesday. The US auto industry is under attack as sales of foreign-made vehicles continue to increase. Shares of General Motors fell in trading on the New York Stock Exchange on Wednesday. PHOTO: AP

General Motors Corp said yesterday it is in talks to sell its stake in Isuzu Motors Ltd as the troubled company jettisons assets to drum up badly needed cash and hang onto its title as world's biggest automaker.

Disposing of GM's 7.9 percent stake in the Japanese truckmaker would mark the latest retreat for a company besieged by staggering losses, labor problems and mounting competition, especially from archrival Toyota Motor Corp.

The move would also highlight GM's rapid pullout from Japan. Earlier this month, Detroit-based GM sold its 17 percent share in Suzuki Motor Corp for about US$2 billion, leaving it with 3 percent.

That followed last year's sale of GM's entire 20 percent stake in Fuji Heavy Industries, the maker of Subaru cars.

GM once looked at shares in these smaller Japanese competitors as a window to cracking the tough Japanese market. But after making few inroads here and facing dwindling market share at home, the company has more urgent priorities -- like becoming profitable again.

"Isuzu is aware that GM is in an important phase of going back into the black in its North American operations and reviewing its investment portfolio, and needs to strengthen its balance sheet and liquidity," Isuzu said in a statement announcing that the two sides were examining a stake sale.

General Motors has shopped the Isuzu stake to three Japanese companies, Mitsubishi Corp, Itochu Corp and Mizuho Corporate Bank Ltd, and they are still considering the offer, spokesmen from the three companies said.

GM and Isuzu said in separate releases that no decision has been reached, and there was no word on a possible price.

General Motors holds about 90 million shares in Isuzu, which makes trucks, buses, sports utility vehicles and engines, with the entire stake valued at about ¥38 billion (US$320 million), according to Isuzu spokesman Naruhito Furuta.

GM said it was discussing a "private transaction" but that the sale was not expected to affect cooperation with Isuzu, in which it first invested in 1971.

"Isuzu is a core alliance partner with which GM has many long-term mutually beneficial projects, and the level of activity between the two companies continues to increase," GM said.

Isuzu's shares, mostly flat the past six months, rallied to the news, jumping 2.3 percent to finish at ¥436 (US$3.73).

General Motors has seen its US market share shrink, largely due to Asian competition, and has outlined a plan to cut 30,000 jobs and close 12 facilities in North America by 2008. The company lost US$10.6 billion last year.
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