Struggling Japanese truck maker Isuzu Motors said in an interview with Reuters on Wednesday that China holds the key to the company’s revival as it works to reduce its massive debt loading by 20% in the next two years.
Reuters said that Isuzu’s group interest-bearing debt is projected at a daunting 560 billion yen ($4.7 billion) by the end of this month — roughly half of its expected revenue.
But chief financial officer Shigeki Toma told the news agency that, through increased revenues and asset sales, Isuzu should be able to meet its targets for cutting the debt to 450 billion yen by March 2005.
“Including part of the Kawasaki plant that we intend to sell, we have about 100 billion yen worth of assets that can be sold,” Toma, a former managing executive officer at creditor Mizuho Corporate Bank, told Reuters.
Isuzu has already sold part of its plant in Kawasaki, just outside of Tokyo, and has said it would soon try sell the rest to raise cash, Reuters noted.
Toma told Reuters Isuzu was minimising risks at its loss-making North American operations while pushing forward in the promising Asian market, with an emphasis on China where it planned to expand with a full product line-up in a country where truck demand was now about 10 times that of Japan’s.
Reuters said that Isuzu already builds buses and small- to medium-sized trucks in China, and is set to begin building 5,000 large trucks a year from 2004 through a planned joint venture with GM and Shanghai Automotive, for which Toma expects government approval by this summer.
According to Reuters, Toma added that investment for the new venture would “not be large”, especially since it would be using an existing plant, but declined to give any details.
In North America, Isuzu will expand its successful diesel engine business while shrinking its exposure to sport utility vehicles where competition has heated up through the use of heavy incentives, Toma told Reuters.