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Say It Ain't So Joe - Isuzu To Leave U.S. SUV Manufacturing Joint Venture

NEW YORK, Oct 7 Reuters reported that Isuzu Motors Ltd will by year-end dissolve its U.S.-based sports utility vehicle venture with Fuji Heavy Industries Ltd to focus on its truck operation, the Nihon Keizai Shimbun reported.

The move will make the debt-strapped truckmaker the first Japanese automaker to withdraw from directly controlled production of SUVs in the United States, according to the paper's online Tuesday edition.

Chip Letzgus, a spokesman for Isuzu Motors' North American unit, said the report was speculation.

"We are always looking for ways to make our operation more efficient but we have nothing to comment on the speculative report," he said.

The Indiana-based joint venture, Subaru-Isuzu Automotive Inc., which is 49-percent-owned by Isuzu, will become a 100-percent-owned subsidiary of Fuji, and Isuzu will outsource SUV production to the firm, the paper said.

Fuji Heavy plans to accept the shares held by Isuzu, or Isuzu may conduct a reduction in capital, it said.

In addition, Isuzu will continue selling Isuzu brands in the United States by procuring vehicles with 2.5-liter engines from its top shareholder, General Motors Corp., the paper said.

GM announced in August that a bailout package -- including support from banks -- worth at least 160 billion yen ($1.29 billion) has been arranged for Isuzu.

The paper said Fuji Heavy has been running its assembly lines at full capacity thanks to strong U.S. sales of its Legacy model but Isuzu's SUV sales have been slumping.

The Indiana facility has a combined annual output capacity of 200,000 vehicles.