GM To Sell Stake In Isuzu

Posted on April 11, 2006

General Motors Corp. said it will sell its 7.9% stake in Japanese truck maker Isuzu Motors Ltd. for $300 million, ending a 35-year equity alliance to raise much-needed cash to revive its ailing business. In a widely expected move, Japanese trading houses Mitsubishi Corp. and Itochu Corp. will each take a 3.5% stake from the U.S. auto giant, while Mizuho Corporate Bank will buy the remaining 0.9%.

The sale of diesel-savvy Isuzu, regarded as GM's strongest strategic partner in Japan, demonstrates the urgency of GM's task to improve its cash flow, given the relatively modest proceeds from the transaction. GM said its relationship with Isuzu would remain intact at the operational level and could even strengthen in the future as the automaker seeks to expand in developing countries and demand for diesel cars grows around the world.

GM accounts for more than one-fifth of Isuzu's revenues, purchasing more than $1.54 billion in parts and products from the Japanese truck maker. GM and Isuzu first formed an equity alliance in 1971 and their cooperation spans a broad range, including mutual supply of trucks as well as joint development and production of commercial vehicles and diesel engines.