TOKYO - Isuzu Motors Ltd., on the brink of failure last year and in need of lender support, has been given a shot in the arm by new government regulations.
Tightened emission regulations, which will go into effect in October, have spurred truck demand in Japan by accelerating corporate buyers' shifts to greener trucks.
In the first quarter of this year, overall Japanese sales of medium- and heavy-duty trucks climbed 25 percent from a year earlier to 28,025, excluding imports.
At Isuzu, sales of those trucks jumped 34.3 percent, the biggest gain among Japan's four heavy-duty truckmakers, to 6,583.
The rebound in long-dormant truck sales in Japan is particularly sweet for Isuzu, and not just because its sales numbers are up.
Isuzu deliberately chose to shift gears as part of its restructuring. It is dropping its SUV business in the United States and has sold majority stakes in its key diesel operations to its top shareholder, General Motors. GM owns 12 percent of Isuzu.
In effect, Isuzu placed a big bet on its ability to make money as a medium- and heavy-duty truckmaker focused on the Asian markets.
Signs of Isuzu's sales recovery have cheered investors, who have lifted its share price to ¥82, or about 68 cents, as of April 2, double the 34 cents a share at which Isuzu traded at the start of the year.
To respond to the increase in truck demand, Isuzu boosted monthly production of heavy-duty trucks with loading capacity of more than 10 tons at its Kawasaki plant, south of Tokyo, to about 1,500 since January from a monthly average of 920 in 2002.
The upswing at the plant also was driven by strong demand from China, which is investing heavily in infrastructure ahead of the 2008 Beijing Olympic games. Isuzu's monthly shipments of the heavy trucks built in Kawasaki to China have jumped to 600 - roughly double last year's monthly average.
The production increase at Kawasaki has prompted Isuzu to postpone preparations for shutting down the 65-year-old plant.
The truckmaker had planned to shift production from the Kawasaki plant to its other Japanese factory in Fujisawa in October. It will delay that transfer until May 2004.
Isuzu remains on schedule to close the heavy-truck plant by the end of 2005 because it expects sales to decline when the demand drivers of regulatory changes and pre-Olympic spending run out of steam.
Plus, Isuzu faces stiff competition from its rivals. For example, in May, Mitsubishi Fuso Truck and Bus Corp., a spinoff from Mitsubishi Motors Corp., is expected to increase its monthly production capacity of medium- and heavy-duty trucks by more than 40 percent to about 1,700. The company declined to give specific figures.
Isuzu's revival plan calls for it to post $292 million in net income in the fiscal year, which started April 1.