Despite pressure from its dominant shareholder, General Motors, Isuzu Motors Ltd. has no plans to speed the pace of its restructuring plan.
The plan projects a return to profitability over the next 12 months after two years of losses. A spokesman says the plan is progressing. Isuzu plans to expand its diesel engine business, add a sport-utility for the U.S. market and slash procurement costs 30 percent over the next two years.
But in an unusual public scolding, GM warned that it is running out of patience with its 49 percent-owned affiliate. Speaking to analysts on Feb. 22, Rudolph Schlais, president of GM's Asia-Pacific operations, said Isuzu needs to take 'radical' action to return to profitability.
'Clearly, Isuzu must consider immediately exiting models and businesses that are unprofitable and which do not appear likely to return to profitability in the very near future,' Schlais said.
GM said it lost $97 million in the fourth quarter from its share of Isuzu's losses.
Schlais' remarks found support among many financial analysts in Tokyo. They say Isuzu must take a more radical approach to restructuring. Their suggestion: Get out of the sport-utility business and focus on diesel engines and heavy trucks.
'In the end, Isuzu should focus on engines,' says Masahiro Yamaki, an analyst at Quick Business Research Institute in Tokyo.