Isuzu 2003 Annual Report Download - page 8

ISUZU MOTORS LIMITED ANNUAL REPORT 2003
6
January 2003 Isuzu’s stake in SIA to FHI, which gave the latter
full control of the joint venture’s plant. Isuzu will continue to
supply SUVs to the North American market by consigning
SUV production to SIA.
Isuzu is also working to further raise the efficiency of
sales activities. There are two main goals: reduce SUV in-
ventory turnover to 90 days, and more than halve the
workforce. Furthermore, efforts will be made to maintain a
tighter rein on these fixed costs.
Isuzu began receiving OEM supply of SUVs from GM to
reinforce its product lineup. Under this framework, we
launched the
Ascender model in November 2002.
RESTRUCTURING THE NORTH AMERICAN
SUV BUSINESS
North American SUV operations have run up large losses
as a result of higher selling costs and increasing invento-
ries due to declining new vehicle sales. This stemmed from
a volume-driven business model that emphasized raising
capacity utilization at Subaru-Isuzu Automotive Inc. (SIA),
our local manufacturing joint venture with Fuji Heavy
Industries Ltd. (FHI).
Restructuring actions were taken to restore profitability
to North American SUV operations. One initiative was the
booking of impairment losses on excess production facilities.
Another was the rationalization of operations by selling in
GM
ISZ
SIA
AIMI*
GMICT*
Dealers
Dealers
*
M&E— Machinery and Equipment
*
ISZA— Isuzu Motors America, Inc.
*
AIMI— American Isuzu Motors Inc.
*
GMICT— General Motors Isuzu Commercial Truck, LLC
Review and rescale business operations in line with decreased SUV sales volume
1. Adjust manufacturing capacity (including review of product sourcing, e.g. OEM)
2. Review sales cost and organization to match sales volume (areas in red)
SUV Businesses in North America
ISZA*
Sourcing
Alleviate M&E*
depreciation
cost burden
Right-size cost
of sales
Distribution
SUV
CV
SUV
CV
SUV
(KD)