No Lie: Isuzu to Stop Making Passenger Cars : Automobiles: The move will leave a gap in General Motors’ Geo lineup.

In a major step toward the consolidation of the Japanese auto industry, Isuzu Motors has announced that it would soon stop manufacturing passenger cars, citing high costs and weak sales in Japan and abroad.

It is the first Japanese company in more than two decades to leave the overcrowded passenger car market. Japan has nine automobile makers, and analysts have long predicted there would be a shake-out.

The announcement Saturday marks a setback for General Motors Corp., which owns 37.2% of Isuzu and relies on the Japanese company to supply its GEO Storm subcompact models. Isuzu said it will stop supplying the GEO Storm model at the end of 1993, leaving a gap in GM’s car line-up.

GM spokesman David Hudgens told the Reuters news agency that GM will be forced to stop selling the Storm at the end of next year, but hopes to offer a new Storm model in 1996 supplied by another auto maker.

Isuzu is expected instead to help GM with its current line of small trucks.

The company known in the United States for its “Joe Isuzu” liar ad campaign said it plans to expand marketing of its four-wheel drive recreational vehicles, including the Trooper and Rodeo, and trucks.

Isuzu said it is close to agreeing to a major new partnership with Honda. Under the proposed agreement, Honda would supply 10,000 subcompacts a year to Isuzu to be sold through Isuzu dealers in Japan. In return, Isuzu will sell an estimated 20,000 recreational vehicles manufactured by Honda. Honda has suffered from a lack of models to sell in the rapidly growing recreational vehicle market.

The Japanese auto industry’s long trend toward consolidation has been accelerated by Japan’s recession and weak auto market. After a rapid increase in sales and production in the late 1980s, the Japanese market has been mired in a two-year slump.

Japanese car makers have also been hurt by weak sales in the United States. Daihatsu Motor, which is one of Japan’s top manufacturers of minicars, recently closed its U.S. operations because it couldn’t turn a profit.

A growing number of companies are developing joint production and sales agreements in an effort to cut costs.

Nissan Motors and Fuji Heavy Industries, the maker of Subaru cars, have strengthened their relationship over the past year. Fuji now manufactures cars for Nissan. The two companies also use many of the same parts. Fuji also has joined with Isuzu to manufacture recreational vehicles in the United States.

Suzuki Motor, another one of Japan’s smaller auto makers, supplies cars to both General Motors and Mazda.