August 6, 2012 / 4:55 AM / 5 years ago

Isuzu to stop developing next-generation engine for Opel-Nikkei

2 Min Read

TOKYO, Aug 6 (Reuters) - Japan's Isuzu Motors Ltd plans to stop developing a next-generation engine for Opel, the ailing German unit of General Motors, and to pull out of a joint venture in Poland with GM, the Nikkei business daily reported.

The Japanese truck maker has been making diesel engines for Opel's Astra Corsa and Meriva in Poland since 1999 through a joint venture with GM, in which Isuzu has a 40 percent stake.

Isuzu plans to halt the engine development because of the slumping European market, and the Japanese truck maker also wants to cut the workforce of its European business by around 10 percent, the Nikkei reported, without saying where it got the information.

Eiji Mitsuhashi, a spokesman at Isuzu, declined to comment on whether development of the next-generation engine for Opel will be halted.

He denied that Isuzu is pulling out of the venture and that it is cutting its workforce in Europe.

Isuzu shares rose 5.1 percent to 409 yen as of 0403 GMT, outperforming the benchmark Nikkei's 1.8 percent gain.

GM said last week that its Europe unit swung to an operating loss of $361 million in the second quarter from a profit of $102 million a year earlier. But that loss was smaller than some analysts had anticipated, helping the group to post a better-than-expected profit.

GM at one point owned as much as 49 percent of Isuzu before selling its stake. Isuzu said in May that it was not in talks on forming an equity alliance with GM, dismissing reports that such discussions were taking place.

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