TOKYO -- General Motors is in talks to turn over its commercial truck business in Australia to Isuzu Motors Ltd., the Japanese truckmaker said on Monday, and shares in Isuzu rose as much as 5 percent.
Isuzu, owned 8 percent by the struggling U.S. auto giant, said it aimed to strengthen its overseas operations because it expected demand in Japan to slow down in coming years. It added that it aimed to boost its business as the core truck maker of the Detroit automaker's group.
The Nihon Keizai newspaper reported earlier that GM would sell its 40 percent stake in Isuzu-General Motors Australia Ltd. to Isuzu as early as November, making the joint venture the Japanese firm's wholly owned subsidiary as GM focuses on its passenger car operations.
An Isuzu spokesman said the two companies had not reached an agreement, and details would be decided later. He denied the newspaper's comment that the move was also intended to help GM.
GM declined to comment on the report, but said in a statement the world's biggest automaker was always looking to expand and strengthen its cooperation with Isuzu, which it called "an important partner".
Their Australian joint venture, founded in 1989, sells trucks that are imported from Japan. It sold 7,100 units in 2004, taking about 24 percent of the market for trucks over 4 tons, the spokesman at Isuzu said. He did not give sales figures. Isuzu also planned to take a majority stake in a new truck unit in South Africa to be spun off from a GM subsidiary, the paper said, while raising its 40 percent stake in a North American diesel engine production venture now held 60 percent by GM.
The Isuzu spokesman said the company had no immediate plan to beef up its business in the South African market.
MOVE SEEN POSITIVE
Analysts said the moves would be positive for both partners.
"For GM, which has to pursue selectivity and focus to transform its earnings structure, the passenger vehicle operations are the heart of the company and the ones it has to keep," Nikko Citigroup analyst Noriyuki Matsushima wrote in a report.
"The truck operations, on the other hand, are ones where GM is better off leveraging Isuzu's impressive development capabilities and production technologies, and we think the reported deal, if it materializes, would be of considerable advantage to Isuzu, whose earnings recovery is on track."
Matsushima added that while a higher stake in the Australian sales company would have a limited impact on Isuzu's earnings, the South African and North American companies could have a "considerable" positive impact if they became subsidiaries.
GM, which lost more than $1.4 billion in the first half of the year, last week posted a third-quarter loss of $1.6 billion, or $2.89 a share.
GM dissolved its ties with Japanese automaker Fuji Heavy Industries Ltd. this month, selling part of its stake to Toyota Motor Corp.
Isuzu planned to spend about 30 billion yen ($259 million) on a reorganization of its overseas operations in three years, the paper added.
The company spokesman said it had earmarked 30 billion yen in capital spending for its core operations in three years, but had not decided how much would be spent on its overseas business.