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Isuzu to team up with GM to seek Southeast Asian markets

Publication Date : 14-01-2013

 

The planned alliance between Isuzu Motors Ltd. and General Motors Co. to jointly develop pickup trucks is aimed at strengthening sales in newly emerging markets in Southeast Asia and other areas.

Isuzu is aiming to restart business tie-up talks with GM after a seven-year interval to compete against such automakers as Germany's Daimler AG and Volkswagen AG.

Isuzu and GM forged a capital and business partnership in 1971 that lasted more than 30 years. In 1999, GM increased its stake in Isuzu to 49 per cent.

However, under troubling financial conditions, GM sold its stake in Isuzu in 2006 and broke off their capital alliance.

It was believed the companies' relationship has cooled since then, as Isuzu started negotiations with Volkswagen over a tie-up and ended its consignment of its pickup truck production in Thailand to GM.

However, Isuzu and GM started arrangements to form an alliance behind the scenes in 2012, with Isuzu officially announcing Thursday that the two companies have agreed to restart talks.

The two firms plan to jointly develop a next-generation pickup truck by combining Isuzu's fuel-efficient diesel engines and GM's hybrid technology.

Isuzu believes an alliance with GM is better than a tie-up with other automakers, with one senior official saying, "We decided GM is more reliable than Volkswagen as our alliance partner since we had an alliance with GM that lasted more than 30 years."

Isuzu and GM decided to join forces again to compete with other automakers by combining their respective technologies. Although GM is No 1 in the global pickup truck market, the company is struggling in Southeast Asia.

Isuzu has a nearly 30 per cent share in the pickup truck market in Thailand, and the company has been interested in GM's hybrid vehicle technology.

Through continued negotiations, the two companies likely realised they could complement each other in sales and technology.

However, Isuzu has taken a cautious stance toward a capital alliance requested by GM. "We may end up swallowed up by a big partner," a top official at Isuzu said.

 

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