Isuzu Cuts Back Thailand Expansion on Demand

Isuzu Motors Ltd., Japan's largest truckmaker, scrapped expansion of pick-up truck production in Thailand and delayed a plan to build heavy duty trucks in Russia next year as the global recession saps vehicle demand.

Isuzu may also delay making diesel car engines for Toyota Motor Corp. from 2012, President Susumu Hosoi said in an interview in Tokyo on Dec. 10.

The company's 67 billion yen ($739 million) capital spending for the fiscal year ending March 31 will be 10 percent lower than its initial estimates, Hosoi said. Economic recessions in the U.S., Japan, and Europe are sapping demand for vehicles worldwide and Thailand's economy may contract for the first time in a decade next quarter, partly due to political turmoil.

"Isuzu has frozen all new investments for the second half,'' Hosoi said. ``The market will remain bad across the board next year.''

In Thailand, the company won't add a new assembly line for pick-up trucks at the Gateway plant, where it already builds commercial vehicles. A slowdown in Russia and a stronger yen against the ruble prompted Isuzu to postpone its plan to make heavy-duty trucks at a factory jointly operated by OAO Severstal- Avto of Russia and Sojitz Corp. of Japan.

Isuzu, which has cut production and jobs in Japan, is scaling back expansion as demand for its N-Series trucks and D-Max pickups slumps amid the recession triggered by the financial market turmoil.

Isuzu Expansion Plans

Isuzu had allocated 230 billion yen to expand production 58 percent in the three years ending March 2011, from the previous period. In the three-year business plan that started in April, the carmaker aimed to raise global sales 32 percent to 840,000 vehicles from last fiscal year.

Isuzu announced separately that it has decided to halt a diesel engine project with Toyota due to a slowdown in global growth, according to a statement released through the Tokyo Stock Exchange today. Toyota bought a 5.9 percent stake in Isuzu in 2006 to cooperate on diesel engines.

"Everyone, even us, is reviewing all new projects including new models,'' The two-year-old concept for the engine ``may not work because there may be a structural change in demand due to the economic slowdown,'' Hosoi said prior to the announcement.

The two companies last year said they would start production of the 1.6-liter diesel engines by 2012. Toyota's compact car equipped with the engine is already being tested, he said.