Talks are about to start between General Motors Co and Isuzu Motors Ltd over a plan to jointly develop a next-generation pickup truck. This move may help reduce costs and the load of technology development. In separate statements, the companies said that they had inked a memorandum of understanding to begin negotiations.
However, details about the talks like the timing or any other aspect were undisclosed. According to a report from Japan's Nikkei business daily, the deal will also include co-management of their pickup truck business. It’s set to be formalized later this month during a meeting participated in by Isuzu President Susumu Hosoi and GM CEO Dan Akerson. The publication said that there will be further talks about the prospect of GM again acquiring a stake in Isuzu.
However, an Isuzu spokesman rejected the idea that there will be capital ties. He said that there’s “no possibility” of this. GM is eager to benefit from Isuzu’s strength in Southeast Asian markets and its diesel technology. Meanwhile, an agreement for Isuzu means that it may share the weight of developing technologies.
Kei Nihonyanagi, an autos analyst at Barclays Securities in Japan, said that since Isuzu considers it a big cost burden to develop engines, it likely thinks that it would have to “cooperate with someone” but it doesn’t require a capital tie-up. He said that Isuzu will recoup its investment easier if it can sell its engines to GM. It was in 1971 that GM first got a stake in Isuzu. At some point, it held up to 49% of Isuzu before selling the holding down. GM sold the 7.9% stake left in Isuzu for $300 million in 2006.