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Isuzu seeks to quit Guangzhou joint venture

Shanghai. February 14, 2008; (Gasgoo.com) Isuzu Motors Ltd, Japan's biggest maker of trucks and buses, plans to withdraw from its Chinese joint venture company Guangzhou Isuzu Bus Co. Ltd, Shanghai Securities News reported yesterday.

Talks between Isuzu and Guangzhou Auto over their bus-making joint venture company are nearing completion and a final deal is expected to be reached by the end of March, the report said.

The divorce comes after an eight-year-long unsuccessful partnership. Insiders say both Quangzhou Auto and Isuzu want to quit the joint venture program in order to restructure their business operations.

By quitting the Guangzhou project, Isuzu wants to restructure its operations in China with more focus on the Chongqing-based Qingling Auto. While Guangzhou Auto plans to restructure its commercial vehicle truck-making business by starting a joint venture project with Hino last December.

The USD $200 million joint venture between Guangzhou Auto and Hino has won Chinese authorities approval to produce commercial vehicles, including trucks and buses, earlier this year. Hino and Guangzhou Auto will each hold 50 percent stakes of the joint venture.

The Guangzhou Isuzu Bus Co was formed in March 2000 with Isuzu holds a 49% stake and Guangzhou Auto a 51 percent stake. The joint venture was designed to produce Isuzu's large-sized buses including the Gala, E-, S- and V- series.

The joint venture facility has a designed annual capacity of 800 buses and 400 chassis. However, the joint venture facility produces less than 200 buses a year, according to statistics provided by China Association of Automobile Manufacturers.

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