General Motors is to help its struggling Japanese partner Isuzu by paying more for Polish-made diesel engines.
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Isuzu President Yoshinori Ida told Reuters on Friday that GM, which owns a 49 percent of Isuzu, would pay five percent more for diesel engines it buys from the Japanese company’s Polish unit, which would boost its overall finances.
Ida added that the Polish Isuzu unit, which supplies 1.7-litre diesel engines used in German and Spanish-built Opel vehicles and some UK-manufactured Vauxhalls, would have its cumulative losses of about 3.5 billion yen ($US26.47 million), offset in the first half of 2002 by the deal, Reuters said.
The report added that GM said earlier this month that it did not intend to inject further capital into Isuzu, which is Japan’s biggest light truck maker, but would make every effort to ward off the possibility of bankruptcy, and that Isuzu’s banks would help “tremendously”.
Reuters reported Ida as saying that Isuzu’s performance so far in the second half of its current business year made him confident it would achieve its forecasts for 2001/02.
The company said on Friday that it expected its global vehicle production to drop 11 percent in calendar 2002 to 404,500 vehicles, as sluggish sales in the U.S. and other markets would continue to plague the company, according to the Reuters report.
However, Reuters said, the recent weakening of the yen would boost earnings, and Isuzu forecast a five percent rise in domestic vehicle sales in 2002 on the back of strong demand for its large trucks.
Analysts warned that GM’s show of support could be just a move to support Isuzu’s healthy diesel engine business, rather than signalling the start of greater efforts to prop up the overall business, Reuters added.
