Isuzu denies report of diesel spin-off

May 14, 2002 12:00 PM

Japanese truck maker Isuzu Motors Ltd today denied a newspaper report that it was considering spinning off its diesel engine division, and that General Motors Corp may invest more in the business.

Japan's Asahi Shimbun newspaper reported that GM, which already owns 48 percent of Isuzu and has avoided injecting further capital in the struggling truckmaker, is considering how much of a stake it would take in the business.

"There is no basis to the report of a spinoff or further cooperation with other companies in our diesel engine division," Isuzu said in a press release.

The newspaper said Isuzu's diesel engine operations will remain vital to GM's global strategy. It said the U.S. auto giant was considering further investments in the Ohio-based diesel joint venture, of which it owns 40 percent, and Isuzu's wholly owned Polish unit, which supplies engines to the GM group.

Isuzu has been hurt by a stagnant domestic truck market and sluggish sales of its sports utility vehicles in the United States, but its diesel engine business has been healthy.

The reported moves would be part of Isuzu's revival plan, which is currently being mapped out, the Asahi said.

The company said in January that GM would help it by paying five percent more for the diesel engines that its Polish unit supplies to GM.

Isuzu is set to announce full-year earnings on May 24.