General Motors Co. is poised to re-enter the growing and
potentially lucrative U.S. market for medium-duty work trucks, an
area it abandoned during its restructuring last decade.
The Detroit auto giant will team up with Japan's Isuzu Motors
Ltd. to procure work trucks to be sold in the U.S. under the
Chevrolet brand. GM and Isuzu have worked together for decades.
While Isuzu will build the vehicles, the No. 1 U.S. auto maker in
terms of sales will rely on the GM dealer network and its
reputation as a truck company to lay claim to a medium-duty market
that has grown 3.5% in 2015.
GM will begin taking the Isuzu-built N-series truck and putting
a Chevrolet brand on it soon, according to dealers briefed on the
plan. GM will unveil the partnership Monday in a move likely to be
well-received by a U.S. dealer body clamoring for more work trucks
to sell amid stronger economic conditions.
The contract-manufacturing relationship with Isuzu isn't
atypical for an auto industry looking to share the cost of
developing new products. GM, for instance, also purchases work vans
from Nissan Motor Co., rebrands them as Chevys and sells them in
the U.S.
GM will supply an engine for the Isuzu-built Chevrolet
medium-duty trucks, according to one person familiar with the
production strategy. Financial terms of GM's agreement with Isuzu
aren't immediately known.
The move represents the latest in a series of steps taken under
Chief Executive Mary Barra and her predecessors in recent years to
rebuild after years of downsizing. Facing a cash crunch last
decade, the company killed brands, sold off or abandoned divisions
such as Allison Transmission, and exited the business of directly
financing auto purchases.
In 2010, it bought a finance company and earlier this year took
steps to dramatically expand it, for example. It is investing $5.4
billion over the next three years to upgrade its U.S. manufacturing
footprint and billions of dollars more into reviving Cadillac,
growing in South America and fortifying its position in China.
There have been about 75,000 Class 4 through Class 7 trucks sold
in the U.S. through May, according to automotive-information
provider WardsAuto.com. That is up from 53,000 sold in the first
five months of 2011 and 72,000 sold in the same period in 2014.
Medium-duty trucks serve a variety of roles, with highly capable
cabs and chassis serving as the basis for dump trucks, garbage
trucks, tow trucks and a variety of other functions. Sales of these
vehicles can deliver substantial profits.
The GMC Topkick and Chevrolet Kodiak were built in GM factories
and were once mainstays for medium-truck buyers, but the auto maker
decided to abandon that market around the time it filed bankruptcy
protection in 2009. The auto maker had forged an agreement in 2008
to sell the business to Navistar International Corp., but that plan
unraveled.
While the Isuzu joint venture is just a small step, it
represents the beginning of what is planned to be a wider foray
into a market where rivals Ford Motor Co. and Daimler AG have
remained active. The move should provide at least a portion of GM's
Chevrolet dealers opportunity to make additional money selling,
servicing and outfitting professional-use work trucks.
Write to John D. Stoll at john.stoll@wsj.com
Access Investor Kit for Daimler AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007100000
Access Investor Kit for Isuzu Motors Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=JP3137200006
Access Investor Kit for Daimler AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2338251083
Access Investor Kit for Ford Motor Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3453708600
Access Investor Kit for General Motors Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US37045V1008
Access Investor Kit for Isuzu Motors Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4652542097
Access Investor Kit for Navistar International Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US63934E1082
Subscribe to WSJ: http://online.wsj.com?mod=djnwires