Isuzu, Mazda Discuss Engines; Merger Rumors Are Denied

Japanese auto makers Isuzu Motors and Mazda Motor Corp. are discussing exchanging technology on diesel engines, an Isuzu official said Friday.

The official, speaking on condition of anonymity, would not elaborate on details of the talks. But he denied Japanese media reports of an overall merger between the two firms’ business groups. Such business groups are called keiretsu.

Keiretsu are clusters of firms that only do business with each other. They have been widely criticized abroad as blocking foreign imports.

A recession has led many firms to look outside their own keiretsu as they cut costs and scale back production.

The Japan Automobile Manufacturers Assn. said car sales fell by 11.9% last month from a year earlier, while exports in the month slipped by 12%.

Isuzu, which is 37% owned by General Motors Corp., is associated with the keiretsu headed by Dai-Ichi Kangyo Bank. Ford Motor Co. owns 25% of Mazda, which is linked with the Sumitomo Bank keiretsu .

Isuzu officials said their company was checking to see if their engines could be adapted to fit Mazda cars, but that nothing had been decided.

Last week, Isuzu disclosed plans for some joint operations with Honda Motor Co., including having Honda sell Isuzu’s recreational vehicles in the United States.

Isuzu, which has reported its second consecutive year of losses this year, also said it was pulling out of the passenger-car business and centering its efforts on trucks and recreational vehicles.

Mazda, which has also been hit by hard times, has abandoned plans to develop new luxury cars for sale in the United States and Canada.