Isuzu Mid-term Business Plan
(April 2005 ~ March 2008)

November 18, 2004

Isuzu Motors Limited
President & Representative Director

Yoshinori Ida
1Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Notice to The Readers
Disclaimer
Statements contained in these documents, except for historical or current facts,
are based on certain assumptions and our management's judgment in light ofcurrently available information. Therefore, these statements may be susceptible
to various factors, such as uncertainty contained in the assumptions andmanagement's judgment and economic changes in the future, which may cause
to bring about different results in Isuzu's future earnings and operating results.

Insider Restriction
Information included in these documents contain Material Information as
defined in Article 166 of Securities and Exchange Law of Japan. Any person who
received such Material Information will be so-called the first class information
recipient concerning insider trading restrictions.
Please be advised that the said information recipient is prohibited from any sale,purchase or other transactions of stocks, securities or other instruments issued by
Isuzu prior to the Release as provided in Article 166 of the Securities andExchange Law.
Furthermore, according to Article 30 of the Cabinet Order for Enforcement of
the Securities and Exchange Law, the said Release becomes effective upon 12hours has passed after Isuzu discloses such Material Information to the press orother media.

2

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Contents– Assessment of N3BP Progress

4~6 P

Ⅰ.Future Vision– Business Environment Surrounding Isuzu– Corporate Vision– Technology Development– Product Deployment– Globalization of Functional Capabilities– Mid/long-term Strategic Direction

8
9
10
11
12
13

Ⅱ. Mid-term Business Plan (for 3 fiscal years to March 2008)– Development of Strategic Products• Strategic Products• Reinforcement of Cost Structure• Strengthen Collaboration Relation with GM

15~16
17
18

– Reinforcement of Business Activities

19• Reinforce CV business/earnings in Japan/Overseas• Expansion of LCV and DE businesses

Ⅲ. Performance Target

3

20~21
22~23

24

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Assessment of N3BP Progress
In developing the Mid-term Business Plan

’00/3 ‘01/3 ‘02/3 ‘03/3 ‘04/3 ‘05/3

N3BP

‘06/3

‘07/3

‘08/3

‘09/3～

Mid-term Business Plan

Next Mid-term
Business Plan

Plan

VisionConsl.
Consl. Operating
Operating
Profit:Trend
Profit: Trend (JPY
(JPY bil.)
bil.)
100
100

50
50

00

-50
-50

ResultResultOutlook

Restructuring
Restructuring“Downsizing”・“Right-sizing/optimization”“Downsizing”・“Right-sizing/optimization”

4

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Assessment of N3BP Progress (1)- Key initiatives -Elimination
Elimination ofof
uncertainties
uncertainties

Recapitalization
Recapitalization

Restructure SUV business inNorth America

SIA
SIAJV
JVresolved
resolvedin
inJan.
Jan.'03,'03,production
production
terminated
in
Jul.
'04
terminated in Jul. '04
OEMOEMsupply
supplyfrom
fromGMGMAchieved
streamlining
Achieved streamliningof
oflocallocal
operations
throughcreation
operations through creationof
ofJV
JVEstablish PT JV with GM

Received
ReceivedGM's
GM'sequity
equityparticipation
participationin
inenginemanufacturingsubsidiaries
engine manufacturing subsidiaries

Right-size man-power structure(VER)

4,200
4,200persons
personsdelisteddelistedfrom
frompayroll
payrollthrough
VER
through VER
Achieved
AchievedJPY20.0B
JPY20.0Blabor
laborcost
costreduction
reduction

Consolidate manufacturing
infrastructureConsolidated
Consolidatedvehicle
vehicleproduction
productionat
atFujisawa
in
May
'04.
Fujisawa in May '04.
Sold
SoldKawasaki
KawasakiPlant
Plantproperty.
property.

Debt-for-equity conversion

Converted
ConvertedJPY100.0B
JPY100.0Bdebt
debtinto
intoequity
equityReduction, and increase of
equity capitalRedemption
Redemptionof
ofthen-existing
then-existingsharesshareswithout
consideration
without consideration
NewNewissuanceissuanceof
ofsharessharesininJPY10.0B
JPY10.0B(Cancellation of shares owned by GM
without consideration)

5

In developing the Mid-term Business Plan

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Assessment of N3BP Progress (2)- Financial Targets (Consolidated)
In developing the Mid-term Business Plan

Mar.'03

Mar.'04

Mar.'05

ActualActualIncl. actual

1,349.4

1,430.3

1,450.0Plan

1,270.0

1,250.0

1,270.0

OP

15.5

84.5

86.0

Plan

5.0

50.0

over 60

NI(144.3)

54.7

56.0

Plan

(170.0)35.0

over 50

Interest bearing debt
Plan

517.9

452.7

400.0 *1

560.0

510.0

450.0

(JPY bil.)

Revenue*1 not Incl. CB

Key management indices/ratio in percent (Incl. actual)
Operating profit to sales
1.1%
5.9%
5.9%
Fixed cost to sales(Parent) 22.4%
18.3%
18.9%
Net worth ratio
2.6%
10.2%
14.3%
6

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Ⅰ. Future Vision‘00/3’00/3 ‘01/3 ‘02/3 ‘03/3 ‘04/3 ‘05/3

N3BP

‘06/3

‘07/3

‘08/3

‘09/3～

Next Mid-term
Business Plan

Mid-term
Business Plan
Corporate
VisionConsl.
Consl. Operating
Operating
Profit:Trend
Profit: Trend (JPY
(JPY bil.)
bil.)
100
100

Growth/expansion

50
50

00

ResultOutlook

Plan

VisionVision-50-50

7Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Business Environment Surrounding Isuzu

Vision With increasing burden to respond to the environmental
concerns, it has become absolutely essential for Isuzu Motors
to secure more than sufficient "volume" on a global basis, on
top of the home market in Japan.
 As a CV manufacturer operating globally, Isuzu has a great
potential to increase access in overseas markets.
 As in European passenger car market, Isuzu expects otherregions and market segments will see an accelerated shift
toward dieselization.
ÎBased on these assumptions, Isuzu expects the company can
expand its global businesses

8

Copyright(C) 2004 Isuzu Motors Ltd. All rights reservedCorporate Vision

Vision

The world leading CV, DE company

Isuzu
GlobalGlobalStandard
Standard
VehicleVehicleCompetitiveness
Competitiveness

9

DE
DE
environmental
environmental
technology
technology

DE
DEproduct
product
competitivenesscompetitiveness

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Technology Development

VisionBe the world leading CV/DE company with three No.1 technologies» No.1 Safety technology: Preferred choice of the world for superb product reliability» No.1 Economy: Preferred choice of the world for excellent product life-cycle cost
» No.1 Environmental technology: Preferred choice of the world for super clean diesel

Real-time vehicle info
from ”Mimamori-kun*”” Future advantage”

EconomyEconomyLife-cycle
Life-cycle cost
cost
SafetySafetyProduct
Product reliability
reliability

Environment
Environment
Super-clean
Super-clean DE
DE

Base technology” Accumulated strengths”

10Market info
from ”customers”,”dealers”

Advanced technology* Isuzu's proprietary telematics system, achieving real-time transmission/retrieval of vehicle control data, utilizing
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved
communications network

Product Deployment
Vision» Strengthen Isuzu's leading-edge competitiveness of component*,
deploying products for global markets*Primary devices of vehicles (e.g. DE and chassis, cab and body)

GlobalGlobal DE
DE engineeringengineering design
designphilosophy
philosophy

GlobalGlobal vehicle
vehicle engineeringengineering
designdesign philosophy
philosophy

Introduction
Introduction ofof latest
latest DE
DE modelsmodels inin allall thethe global
global markets
markets

Product
Product line-up
line-up enhancement
enhancement focused
focused on
on global
global markets
markets
Å High: Moredemanding spec
requirement

Å High: Cost

Regions
w/severe
standards

Eu
ro
(E
Ne
w L EPA uropeon (US )g-t
Advanced common
erm )engine that meets(JP
envrn. standards
N)<-- High: Stricter envrn. standards

Multi purpose vehicle
Common compo.
that meets global
requirements

Regions
w/lessseverestandards

Key
Key component
component
competitivenesscompetitiveness11

CV for advanced markets

Localization CV
Single unit compo.

Localization-->High×

Combination/integration
Combination/integration
technology
technology
Volume-production
Volume-production
technology
technology
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Globalization of Functional Capabilities
Vision»» Reinforce
Reinforce functional
functional capabilities
capabilities inin overseas
overseas throughthrough transfer
transfer ofof engineeringengineering andand sales
sales
functionstoregions
wheretransferofmanufacturingfunctionsalready
preceded.
functions to regions where transfer of manufacturing functions already preceded.
1.
1.Transfer
Transfer LCV*LCV* engineeringengineering toto Thailand
Thailand andand establish
establish organization
organization capable
capable ofofcompleting
functional
activities
withintheregion.
completing functional activities within the region.
2.
2.Reinforce
Reinforce CV
CV salessales functions
functions inin keykey international
international markets.
markets.
3.
3.Reinforce
Reinforce manufacturing
manufacturing capabilities
capabilities inin China,
China, andand develop
develop globally
globally optimum
optimum
supplymechanismsupply mechanism

China
China

Sales
Sales

Mfg.
Mfg.

(2)
(2)

Sales
Sales

CVV
LLC
r..
eennggr onn
cttiioffuunnc

Mfg.
Mfg.

Sales
Sales

*Pick-up and its derivatives

Mfg.
Mfg.

12

Engr.
Engr.

(1)
(1)

NA
NA

Japan
Japan CV&DE
CV&DE
CenterCenter
Engr.
Engr.

ASEAN
ASEAN LCVLCVVL
VL Center
Center

(2)
(2)
Engr.
Engr.

(3)
(3)

Sales
Sales

Mfg.
Mfg.

Sales
Sales

Mfg.
Mfg.

Engr.
Engr.

(2)
(2)

Engr.
Engr.

EuropeEurope

(2)
(2)

(2)
(2)

Common/cross-overCommon/cross-overfunctionfunction

Copyright(C) 2004 Isuzu Motors Ltd. All rights reservedMid/Long-term Strategic Direction
Vision» Establish rock-solid management base on 4-core businessstructure, and focus on realization of sustainable growth
Mid/Long-term
Mid/Long-term focus
focus
Business structure

CV business in Japan

CV business in overseas

13» Establish stable earnings base bycapturing/maintaining top market share» Stabilize overall CV business by
securing sound volume base

LCV business»» Sustain
Sustain andand strengthen
strengthen businessbusiness sector
sector asasprofitprofit base,base, matching
matching CV
CV businessbusiness strength
strengthinin JPNJPN

DE business»» Develop
Develop DE
DE businesses
businesses as
as aa newnew pillar
pillarofof corporate
corporate revenue
revenue and profit*Conceptual image of consolidated revenue

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Ⅱ. Mid-term Business Plan(for 3 fiscal years to March 2008)’00/3 ‘01/3 ‘02/3 ‘03/3 ‘04/3 ‘05/3
‘00/3

N3BP

‘06/3

‘07/3

‘08/3

Mid-term Business
Mid-term Business Plan
Plan

‘09/3～

Next Mid-term
Business Plan

Consl.
Consl. Operating
Operating
Profit:Trend
Profit: Trend (JPY
(JPY bil.)
bil.)
100
100

Stepping stone:
Aggressive investment

50
50

00

-50
-50

14

Result

見込
OutlookPlan

Growth/expansion
Visionnn Development
Developmentof
ofStrategic
StrategicProducts
Productsfor
forGlobal
GlobalMarkets
Marketsoo Reinforcement
Reinforcementof
ofbusinessbusinessactivities:
activities:by
byproduct/market
product/market
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

nDevelopment of Strategic Products‐Vehicle for Global Markets‐

JPN
JPN

GIGA
GIGA
GIGA

CV

Forward
Forward

ELF
ELF

NA
NA

China
China

ASEAN
ASEAN

MTBP

Other
Other

C&E
C&E
Japan
Japan spec
spec

Asian Truck
F-series
F-series Japan
Japan spec.
spec.

New ELF, Forward(N-series,F-series)

N-series
N-series Japan
Japan spec.
spec.

••PursuePursue low-pricelow-price strategy
strategy
throughthrough expanded
expanded use
use ofoflocally-sourced
locally-sourced component
component••Create
Create productproduct spec.
spec. that
that
meet
globalmarketmeet global market
requirements
requirements

Multi
Multi purpose
purpose vehicle
vehicleLCV

Pick-up/
Pick-up
Pick-up
Derivative product•Platform•Platform integration
integration

Utility15

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

nDevelopment of Strategic Products‐DE for Global Markets‐

MTBP

DisplacementNEW
NEW DEDE
for HD truck
for HD Truck

for CV

MD
DE
DEforfor
for
MD/LD
truck
MD/LDTruck
truck

for LD Truck

NEW DE for
for••Realize
Realize complete
complete evolution
evolutionofDE
lineupwith'Superof DE lineup with 'Super-clean
clean DE',
DE', onon phasedphasedapproachapproach•Introduce•Introduce 'Super-clean'Super-clean
DE'
DE'

LD
LD trucktruck
for LCVfor PC(GM)16••Reinforce
Reinforce existing
existing productproduct
lineup,andintegrate
lineup, and integratederivative
derivative models
models～～Pick-upforPick-up
Pick-up
V8
V8
DE for GM
V6
V6
L4
L4

• Meet new regulations onsequential basis• Develop new technology andapply new tech for CV DE*DE that strikes a balance between high power and low fuel consumption/low pollution, combining
small2004
displacement
andLtd.
high-boost
Copyright(C)Isuzu Motors
All rightsturbo
reservedReinforcement of Cost Structure
MTBP» Reduce product cost by 20% by using new product introduction
as opportunity

Shift engineeringengineering concept
concept
Shift

Change engineeringengineering processprocess
ChangeProduct cost
17

Modularization
Modularization
‐Cab
‐Cab
‐Frame‐FrameCompo.
Compo. integration
integration‐Engine‐Engine‐Transmission‐Transmission
‐Axle
‐Axle

EnhanceEnhance scope
scope ofof
digitalization
digitalization

Engineering
Engineering cost
cost:: Less
Less 15%
15%
Product
Product cost
cost:: Less
Less 20%
20%

Capex
Capex
:: Less
Less 30%
30%
NumberNumber ofof partsparts:: Less
Less 50%
50%‐Concurrent‐Concurrent engineeringengineering‐Virtual‐Virtual engineeringengineering

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Strengthen Collaboration Relation with GM

MTBP•Isuzu, as a key player in the GM group, has begun the following strategic
studies with GM, aimed at reinforcing collaboration through expansion of
Isuzu’s role in joint product development and manufacturing.

» Expand Isuzu CV business within the GM GroupCV
CV– Integrate next generation MD platform– Consolidate GM Group CV engineering functions at Isuzu» Expand use of Isuzu DE within the GM GroupDEDE– Establish a solid position as a world class diesel engine partner andcontinue to supply world class engineering services and diesel
components to GM and its global alliance partners– Develop technologies to meet global QRD and emissions requirements*Quality,Reliability,Durability

LCV
LCV
18

» Jointly develop next generation LCV models for global
market– Enhance global competitiveness through integration of GM-Isuzu LCV
platform
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Reinforcement of Business Activities- Key Focus by Product/Market -Key Focus

MTBP

TargetMar-'05 ⇒ Mar-'08

Reinforce CV business in Japan• Increase market share• Capture No.1 CV share in Japan (up to 2-3t)

⇒
⇒

30%
40%

Enhance/reinforce CV sales organizationin overseas markets• Realignment and continuous reinforcementof distribution function

CV sales volume in overseas

Maximize LCV operating income

Production volume in ASEAN• Maximize global sales volume• Maximize operating efficiency

Sustainable growth of DE business• Expand business with GM• Penetrate China market
19

CV Market Share
HD
26
2-3t
36

total

150

LCV total

200

⇒

⇒

300
k.units

300
k.units•Expand product models/customer count•Start local production in FY toMarch '08
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

CV Business in Japan- Increase Market Share-

MTBP» Introduce new strategic global products and allocate resources in
key segments, aiming at CV No.1 in Japan
31.0

HD/MD Truck(Over 4t)

30.0

30.0

29.0

28.2
27.6

28.0
27.0
26.0

25.2

25.2

25.0
24.0
23.0

26.2

25.2
24.7

24.9
24.4

24.6

Mkt. share target Mar.’05 Mar.’08
HD/MD Truck
26%
30%
LD Truck
36%
40%

24.1

24.0

23.2

22.0
'95/3 '96/3 '97/3 '98/3 '99/3 '00/3 '01/3 '02/3 '03/3 '04/3 '05/3 '06/3 '07/3 '08/3

41.0

LD Truck(2-3t)

40.0

38.7
36.6

37.0

20

34.1

35.1

33.8
33.9
32.0

'95/3 '96/3 '97/3 '98/3 '99/3 '00/3 '01/3 '02/3 '03/3 '04/3 '05/3 '06/3 '07/3 '08/3

Sales

Small/Mid-scaleTrucking
Comp.

34.4

34.0

32.0

36.4
34.9

35.0

33.0

36.1

35.4

36.0

39.1

Major
Transportation
Comp.

39.0
38.0

Product40.0ÎIntroduce GIGA with New EngineÎIntroduce ELF/Forward full modelchangeÎ Enhance solution
recommendation
Î Reinforce customer service(esp. for wide-area operators,
with high up-time)Î Review customer contact
Î Reestablish wholesale
operations
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

CV Business in Overseas Markets- Enhance/Reinforce Sales Organization -MTBP» Expand overseas CV business up to 300 thousands units in short term,by realignment and continuous enforcement of distribution function.
(k.units)
CV Vol.
China-Establish sales network35⇒

100 k.units

’08/3
300
North America-Reinforce/enhance sales operation-

30⇒

50 k.unitsÎEnhance sales channel/after-sales service
networkÎReinforce/expand collaboration withpartnersÎExpand/optimize product lineupÎMaximum use of Isuzu/GM dealer network

ASEAN

General Overseas Markets-Enter intra-regional businesses25⇒
50 k.units
ÎIn Indonesian market, realign distributionfunction, reinforce service/parts supply
organization
21

’05/3
150

-Secure stable volume60⇒
100 k.unitsÎ Aggressive entry into local sales operations in
key existing markets
Î Create future profit opportunities through step-bystep entry into new markets
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

LCV Business-Maximize operating income-

MTBP»Introduce global, strategic pick-up and derivative products based on globally uniform platform»Centralize operating functions in ASEAN, with Thailand at the core, and achieve maximum
operating efficiency

GlobalGlobal introduction
introduction ofof pick-up
pick-up derivative
derivative
Introduce global,
strategic vehicle
Localize operating
function
22

EU
EU

Production vol. in ASEAN

’05/3
China
China

NA
NA

LCV
LCV center
centerIn
In Thailand
ThailandPhilippines
Malaysia
Malaysia Philippines

Current
Current

Post
Post N3BP
N3BP period
periodEngr

Supportlocalization

Engineering Center inThailandSourcing

Sourced primarily in
Thailand
Supply chain

ASEAN
Supply chain

Mfg

Full-scale productionin Thailand

Maximize manufacturing
efficiency

k.units

200

’08/3
300

Maximize
operating income
Firmly establish
value-chain

Maximize
operating efficiency
Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

DE Business

MTBP-Expand Engine Business-» Focus on increased engine sales to GM, and make market entry
into China

DE supply to GM

Increase engine business in China

Isuzu as a world-class engine
partner to GM, increase engine
model supplied to GM
Increase destination

Step on the accelerator to increase market
penetration of Isuzu DE

Increase engine
model

23

GMIDELDE
Other
Isuzu DE

GM Group
companies/
affiliates

1st
1stStep
Step

2nd
2ndStep
Step

Industrial engine
sales

Expand DE
business• Establish sales
network, service infra.
• Develop customer
base• Localize vehicleuse engine• Increase OEM
sales

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Ⅲ． Performance Target

TargetApr.
’07-Mar.’08
Apr.’07-Mar.’08
Cons. revenue
Cons. OP
% of OP24

JPY1,600 bil.
JPY100 bil.
Over
Over 6%
6%

Copyright(C) 2004 Isuzu Motors Ltd. All rights reservedTrucks for Life[Appendix]
Quantitative Target

1

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved

Quantitative Target (Consolidate)
FY2005 Forecast

FY2008 Forecast

April 1, 2004 to March 30, 2005

April 1, 2007 to March 30, 2008

Sales Revenue

1,450.0 JPY: Bil.

1,600.0 JPY: Bil.

(10.3%)

Operating Prifit

86.0 JPY: Bil.

100.0 JPY: Bil.

(16.3%)[[% to sales
Working Profit% to sales
Net Income% to sales

5.9% ]

6.3% ]

88.0 JPY: Bil.

100.0 JPY: Bil.

[[

6.1% ]

6.3% ]

56.0 JPY: Bil.

80.0 JPY: Bil.

[[

3.9% ](13.6%)(42.9%)

5.0% ]

Exchange rate

107 JPY/US$

105 JPY/US$

Facility Investment

42.0 JPY: Bil.

180.0 JPY: Bil.
Apr. 2005 to Mar. 2008

26.0 JPY: Bil.

Depreciation

110.0 JPY: Bil.
Apr. 2005 to Mar. 2008

51.0 JPY: Bil.

R&D

160.0 JPY: Bil.
Apr. 2005 to Mar. 2008

Dom. Sales - H/D- L/D

81 K, Unit(▲20.6%)118 K, Unit

96 K, Unit(▲18.6%)26.2 ％

30.0 ％(3.8%)

36.4 ％

40.0 ％(3.6%)

Dom. Production

210 K, unit

260 K, unit

(23.8%)

Dom. Sales

92 K, unit

70 K, unit(▲23.9%)

Export119 K, unit

190 K, unit

(59.7%)

Overseas production

363 K, unit

500 K, unit

(37.7%)

Dom. Share - H/D
- L/D

2

102 K, Unit

Copyright(C) 2004 Isuzu Motors Ltd. All rights reserved