18 December 1998

General Motors Corporation announced it would increase its stake in Isuzu Motors to 49% from the current 37.5% by buying 52.5 billion yen ($457 million) of new shares of the Japanese truck maker.

Isuzu has been hit hard by the Asian economic crisis. The company posted a 5.2 billion yen ($45.2 million) parent current loss in the half-year ended September 30. The deal with GM would provide an infusion of funds for Isuzu to make vital investments and pay off its debts. According to some analysts, money would be also needed to develop stricter emission controls that will be required by future emission regulations.

Earlier this year GM and Isuzu said they would jointly build a $320 million plant in Ohio to make diesel engines for GM pickup trucks. They agreed last year that Isuzu would take over development of diesel engines as part of a global reorganization of GM's powertrain operations. The two companies said they had also agreed to expand their alliance in the commercial vehicle sector, with Isuzu taking on a greater role in engineering new light- and medium-duty trucks for both automakers.

In September, GM announced it would raise its stake in another Japanese affiliate, Suzuki Motor Corp., to 10% from 3.3% by purchasing 42.27 billion yen worth of new Suzuki shares. The two automakers said they would cooperate in developing small, inexpensive vehicles for emerging markets.