DETROIT/TOKYO General Motors Co (GM.N) and Japan's Isuzu Motors Ltd (7202.T) will look at jointly developing a next-generation pickup truck, the automakers said, a move that could help cut costs and lessen the burden of technology development.
The companies said in separate statements that they had signed a memorandum of understanding to start negotiations, but both declined to outline the timing of the talks or any other aspect of the potential deal.
Japan's Nikkei business daily reported that the deal, which will also include co-management of their pickup truck business, would be formalized late this month in a meeting between Isuzu President Susumu Hosoi and GM CEO Dan Akerson.
The newspaper also said the two companies will continue talks on the possibility of GM once again taking a stake in Isuzu, but an Isuzu spokesman dismissed the suggestion of capital ties.
"Currently, there is no possibility of an capital tie-up," the spokesman said. A GM spokesman declined to comment.
GM is seen as eager to tap Isuzu's strength in Southeast Asian markets and its diesel technology, while a deal for Isuzu means it could share the burden of developing technologies.
"Because the cost burden is big for Isuzu to develop engines, it probably sees it necessary to cooperate with someone, though it does not need a capital tie-up," said Kei Nihonyanagi, an autos analyst at Barclays Securities in Japan.
"By being able to sell engines to GM, Isuzu would be able to recover its investment easier."
The largest U.S. automaker first took a stake in Isuzu in 1971 and at one point owned as much as 49 percent of the Japanese truck maker before selling the holding down. In 2006, GM sold its remaining 7.9 percent stake for $300 million.
The companies, which worked together on trucks such as the GM Chevrolet Colorado mid-size pickup, sold as the i-Series by Isuzu, still cooperate in some areas. They jointly developed the updated Isuzu D-Max in 2011 and collaborate in sales in Latin America and South Africa.
Isuzu's top shareholders are trading houses Mitsubishi Corp (8058.T) and Itochu Corp (8001.T), with 9.2 percent and 8.0 percent, respectively. Toyota Motor Corp (7203.T) also owns a 5.9 percent stake.
Shares in Isuzu rose 3.6 percent in morning trade in Tokyo on Thursday, outperforming the Nikkei index that rose 0.7 percent.
(Reporting by Deepa Seetharaman and Ben Klayman in Detroit and Kentaro Sugiyama and Yoko Kubota in Tokyo; Editing by Dan Grebler and Richard Pullin)