GM Sells 7.9% Stake in Isuzu
Cash-strapped General Motors Corp. is selling the shares it holds in truck maker Isuzu Motors Ltd. to two Japanese trading companies and a bank for about $300 million to fund its turnaround in North America, the U.S. automaker said Tuesday.
Disposing of the Isuzu stake marks the latest retreat for a company besieged by staggering losses, labor problems and mounting competition from Asian automakers. The move also highlights GM’s rapid pullout from Japanese partnerships it has built since the 1970s.
GM said last month that it was selling its 7.9% stake in Isuzu but would keep its partnership with the Japanese company, such as joint development and manufacturing of trucks.
GM Chief Executive Rick Wagoner said the sale was needed to strengthen GM’s balance sheet during the revival effort and would not end the alliance with Isuzu.
This month, GM sold 17% of Suzuki Motor Corp. for about $2 billion, leaving it with a 3% stake. That came after last year’s sale of GM’s 20% stake in Fuji Heavy Industries Ltd., the maker of Subaru cars.
The GM-Isuzu partnership covers the development, manufacturing and distribution of pickup trucks in Asia, Latin America, Africa and the Middle East. They make diesel engines for cars in Europe and pickups in the U.S. GM acquired a 34% stake in Isuzu in 1971 and raised that to 49% in 1998. In 2002, GM lowered its stake to 12% and then to 7.9% last year.
GM, the world’s largest automaker which lost $10.6 billion last year and plans to close 12 facilities in North America by 2008, also said this month that it was selling a 51% stake in its finance arm General Motors Acceptance Corp. in a deal expected to generate $14 billion.
After the GMAC sale, the automaker will have enough cash for its restructuring, GM Treasurer Walter Borst said. Existing cash, the proceeds from a stake in GMAC and $3 billion from the sale of investments in three Japanese automakers in the last six months will give the company sufficient funds, he said. The cash also will pay for new models and expansion outside North America, he said.