A tricky balancing act at Isuzu Motors


Yoshinori Ida, president of Isuzu Motors Ltd., is engaged in a high-wire act. The company’s stock price has nose-dived in a sign of investor distrust of Ida’s announcement last month of a restructuring plan for the ailing truckmaker. Its North American losses for the fiscal first half widened from a year earlier. Worse, Japan’s truck market, key to Isuzu’s future, remains mired at sales levels near 30-year lows.

Undaunted, Ida, 58, who a year ago took over the reins at Isuzu, is trying to move faster. His plan calls for Isuzu, 49 percent owned by General Motors, to boost production of diesel engines in the United States for both GM and Isuzu vehicles, to rebuild its North American sport-utility business with new diesel-powered models, and to make a bigger push into the Asian truck market. Ida met with Staff Reporter Yuzo Yamaguchi in Tokyo Dec. 10.

The stock market is not satisfied with your restructuring plan. When you talked to analysts and investors, what criticisms did they express, and how did you answer them?

They have given high marks to the quick improvement of our business, but the stock price hasn’t reflected that fairly. I don’t know why. It’s hard to see what is factored into the stock price.

I have to wonder if the market is fairly considering the potential of our business and the support from our biggest shareholder, GM, and our main bank.

When stock market traders Dec. 3 saw a huge sell order, which was a clerical mistake, they assumed it came from GM. Why do you think they were so quick to believe GM was selling part of its stake in Isuzu?

When GM came to the Tokyo Motor Show, they said they wouldn’t sell our shares. So it’s really hard to understand why people thought GM might have sold off our shares.

What is Schwarz in charge of?

He is in charge of r&d, production and purchasing. I’ve left those core parts of Isuzu to him to get the most of his great experience in the truck business at GM. He is actually an engineer, and he wants to contribute to Isuzu’s truck business.

When I asked him if he wanted to have the right to represent our company legally, he said that he didn’t need such a title and that he wanted to concentrate on his job.

What is your forecast for the North American market?

The Class 8 segment has fallen nearly 50 percent, and Classes 2 to 7 are off about 25 percent. Overall, our truck sales there probably will be a bit more than 20,000 this year, and I don’t think they’ll fall below that next year.

How about the Japanese truck market?

Overall, the market could be 83,000 or 84,000 units for this fiscal year through March. Next fiscal year, I think the market will surpass 90,000.

Your DMAX engine venture in Ohio with GM seems to be going fine. What are your plans to boost production of diesel engines there in the medium and long term?

Next year, we plan to make about 120,000. By 2003 we hope to make 150,000. By around 2005, we want to be producing 400,000 a year by adding two engines — a V-6 and a direct-injection four-cylinder — to the current V-8.

You have plans to start building diesel-powered sport-utilities in North America at Subaru-Isuzu Automotive Inc. in Lafayette, Ind. How do you see U.S. demand for diesel sport-utilities, considering that many are skeptical about consumer acceptance?

Our diesel engines will be compact and high performance. That would make a customer say, “Oh, this diesel is different.”

Our engines will break the conventional perception that a diesel is noisy. The engines will give better fuel economy, with low emissions.

Our diesel technology has been improving in Europe, and it will further improve for the United States. I’m confident that our engines will make the American customer say, “Oh, I didn’t know diesel engines are as great as this.”

The engines can meet U.S. EPA regulations.

Do you plan to install diesels in both the Rodeo and Axiom?

It’s hard to get both of them out at the same time. So, the Rodeo will come first.

How many diesel-powered Rodeos do you hope to sell in North America?

I’m confident that we can sell more than 10,000 a year.

What will be the fuel economy of this engine?

More than 47 miles per gallon.

Are you going to sell the diesel-powered Rodeo through your own sales channel, or are you going to ask GM to sell the vehicles through its network?

We’ll sell them on our own. I think GM will install the engines in its own SUVs. I think it is likely that GM will do so.

You have been working with GM on diesel engines and pickups. Are you working with GM on anything else?

In the United States, we’ve been working on diesels and trucks. In Europe, we are working on diesel engines.

In Asia, we will do pickups together in Thailand. There also is an Asian utility vehicle for developing countries. That’s a new SUV.

When will you launch it?

We can’t talk about it now.

How is the next-generation pickup coming?

I think it’s in final development, and we will launch it in Thailand as early as next year.

We will install in this vehicle a direct-injection four-cylinder diesel engine and maybe a V-6 gasoline engine as well.

Where are you going to sell it?

All over the world except North America.

After you stop supplying the Passport to Honda, what will you do with that factory capacity at SIA?

Well, we can’t think of any new vehicles right now. We have to take care of the Axiom and give it a push because our SUVs tend to take time to sell well.

We’ll show new concepts of the Axiom at the Detroit motor show.

Are they derivatives of the Axiom?

Yes. The Axiom looks a little bit different from our conventional SUVs, so I think it would take time for the Axiom to sell well.

I tell our people not to get disappointed and to take the time to sell it.

Can you foresee you and Honda making a new sport-utility at SIA?

No, I can’t.

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