General Motors re-enters abandoned market with rebadged Isuzu vehicles

General Motors Co will return to the growing US medium-duty truck market next year by offering Isuzu-made vehicles under the Chevrolet brand, according to people familiar with the matter who declined to be identified because the information was not yet public.

The companies are expected to make an announcement as early as Monday, the people said, with Isuzu shares settling 1.8% higher in Tokyo following a Wall Street Journal report on the deal.

Under the partnership, Isuzu will manufacture the vehicles, while GM will rely on its dealer network and reputation as a truck company to once again step into a market that has grown 3.5% this year and where rivals Ford Motor Co and Daimler AG have remained active.

The biggest US automaker by sales exited the medium-truck segment around its 2009 bankruptcy filing and its decision to come back on board is expected to be well perceived by investors at times of accelerating US economic growth and growing demand for multi-functional trucks.

It was not immediately clear how many N-series trucks Isuzu would supply under the deals terms. About 80% of the total will be equipped with diesel engines and shipped from Japan, while the rest will be assembled at a US plant operated by an Isuzu partner and fitted with GM gasoline engines, according to a person familiar with the production strategy.

The deal is the latest in a series of moves taken by the US carmakers top management in recent years to bolster the companys performance after record vehicle recalls and years of downsizing which saw brands and divisions being killed or sold off. The US company sold its stake in Isuzu in 2006.

The contract-manufacturing partnership, a way to share the cost of developing new products, is not the first of its kind between the two companies. They have jointly developed trucks in the past, such as the Chevrolet Colorado which was sold as the i-Series by Isuzu. Meanwhile, GM also purchases vans from Nissan Motor Co and sells them under the Chevy brand in the US.

Isuzu Motors Ltd settled 1.8% higher on Monday in Tokyo at ¥1 581 per share, marking a one-year jump of 22.94% and valuing the company at ¥1.32 trillion.

General Motors Co rose 0.45% on Friday in New York to close at $35.71, being almost flat year-over-year at +0.53% and with a market capitalization of $57.39 billion. According to the Financial Times, the 17 analysts offering 12-month price forecasts for General Motors Co have a median target of $44.00, with a high estimate of $51.00 and a low estimate of $28.00. The median estimate represents a 23.21% increase from the last price of $35.71.