General Motors Sells Isuzu Shares

TOKYO April 11, 2006; Yuri Kageyama writing for the AP reported that cash-strapped General Motors Corp. is selling the shares it holds in truckmaker Isuzu to two Japanese trading companies and a bank for about US$300 million (euro248 million) to fund its turnaround in North America, the U.S. automaker said Tuesday.

GM said last month that it was selling the 7.9 percent stake it held in Isuzu Motors Ltd., or about 90 million shares, but will keep its business partnership with Isuzu, such as joint development and manufacturing of trucks and diesel engines.

Previously, the Detroit-based manufacturer had been the top stakeholder in Isuzu.

Mitsubishi Corp., which has a joint venture with Isuzu to make and sell trucks in Thailand, is purchasing 40 million shares at 16 billion yen (US$135 million; euro112 million), raising its stake in Isuzu from 0.2 percent to 3.7 percent.

Itochu Corp., which has a partnership with both GM and Isuzu, is purchasing 40 million shares at 16 billion yen (US$135 million; euro112 million), raising its stake to 4.2 percent, and Mizuho Corporate Bank, which works as Isuzu's main bank, is acquiring 1 million shares for 4 billion yen (US$34 million; euro28 million), the companies said.

GM Chief Executive Rick Wagoner said the sale was needed to strengthen GM's balance sheet during the revival effort and would not end the alliance with Isuzu.

"Our relationship is strong and getting stronger, and we look forward to our continued partnership," he said in a statement.

Shinji Kitayama, auto analyst with Shinko Securities Co. in Tokyo, said the shares were going to businesses that already had ties with Isuzu, and made sense.

Disposing of the Isuzu stake marks the latest retreat for a company besieged by staggering losses, labor problems and mounting competition from Asian automakers. The move also highlights GM's rapid pullout from Japanese partnerships it has built since the 1970s.

Earlier this month, GM sold 17 percent of Suzuki Motor Corp. for about US$2 billion (euro1.7 billion), leaving it with a 3 percent stake. That followed last year's sale of GM's entire 20 percent stake in Fuji Heavy Industries, the maker of Subaru cars.

The GM-Isuzu partnership covers the development, manufacturing and distribution of pickup trucks in Asia, Latin America, Africa and the Middle East. They develop and make diesel engines for cars in Europe and develop and make diesel engines for pickups in the United States.

GM acquired a 34 percent stake in Isuzu in 1971, and raised that to 49 percent in 1998. In 2002, GM lowered its stake to 12 percent, and to 7.9 percent last year.