GM and Isuzu plan to jointly develop a next-generation pickup truck, a move which will help the companies cut costs.
Although both GM and Isuzu declared they had signed a memorandum of understanding to begin negotiations, none of them gave any details about the timing of the talks or the potential deal. According to a report published by the Japanese Nikkei business, the deal is expected to be formalized by the end of this month, when the companies will also discuss the possibility of GM taking a stake in Isuzu. Both companies declined to comment on this issue.
It is not the first time when GM would attempt to buy a stake in Isuzu. Such a deal would help GM increase its growth in the Southeast Asian markets and Isuzu to share the burden of developing technologies.
“Because the cost burden is big for Isuzu to develop engines, it probably sees it necessary to cooperate with someone, though it does not need a capital tie-up,” said Kei Nihonyanagi, an autos analyst at Barclays Securities in Japan. “By being able to sell engines to GM, Isuzu would be able to recover its investment easier.”