Isuzu posts record profit but sees weakness ahead
James B. Treece | Automotive News May 14, 2007
TOKYO -- Isuzu Motors Ltd. posted record profits in outgoing President Yoshinori Ida's last year. But incoming President Susumu Hosoi warns that a slowdown in the domestic Japanese truck market will cut profits this fiscal year.
In the fiscal year that ended March 31, operating profits rose 18.0 percent to a record 106.98 billion yen, or $906.2 million at current exchange rates. Net income surged 56.7 percent to a record $782.7 million. Revenues rose 5.1 percent to $14.09 billion. Truck sales grew 4.5 percent to 646,824.
Profits rose mostly on cost-cutting. In addition, currency gains covered the cost of several product launches. Higher, more profitable sales offset higher raw-material prices. The largest sales gains came in the Middle East, Africa and South America.
For the current fiscal year that began April 1, Isuzu predicts its revenues will decline 1.8 percent. Operating profits will tumble 23.6 percent. Net profits will slide 36.8 percent, the company says. Global truck sales will rise 1.4 percent to 656,000. China, Latin America and Europe will show the strongest gains. Sales in Japan will fall a steep 24.0 percent.
"We don't see domestic demand rising," Hosoi says. Japanese truck sales have risen for several years, as fleets ordered new models to meet tightened truck-emissions regulations. But those sales began tapering in the second half of the last fiscal year.
Sales of Isuzu's commercial vehicles in North America will soften slightly, to 32,000 from 33,000 in the year that just ended. That will be roughly half the sales volume expected in Latin America.
Isuzu plans finance unit for trucks
Captive will start in Northeast, go nationwide early next year
Donna Harris | Automotive News May 14, 2007
Isuzu Motors is launching a captive finance company for its U.S. commercial truck business. The company will not finance consumer vehicles. Isuzu Finance of America Inc. begins operations next month. Isuzu has two Japanese partners in the company: Itochu Corp., a trading firm; and Tokyo Leasing Co. Ltd., a financial services firm.
Last year Isuzu sold 15,751 medium and heavy-duty trucks in the United States. Most commercial truckmakers have captive finance companies, said Jim DeFrank, senior vice president of Isuzu Finance.
"Most dealers would like to be a one-stop shop for their truck purchases, including parts, service, financing, insurance and warranties," DeFrank told Automotive News. "This is something they have been asking for, for some time."
Isuzu Finance, of Purchase, N.Y., will start doing business at 125 commercial truck dealerships in 14 states in the Northeast. It will expand to Isuzu's three other U.S. regions early next year. Isuzu has about 500 commercial truck dealerships in the United States. Isuzu Finance will offer subsidized finance rates from the manufacturer. Isuzu dealers typically have offered financing through GMAC Financial Services and local banks.
Isuzu is promoting the finance unit at dealer meetings and with brochures and mailings. It briefed members of Isuzu's dealer council during the American Truck Dealers Association convention last month. Says DeFrank: "Reaction has been very positive."
