Isuzu Motors is restructuring its subsidiary in China to improve operational efficiency and align with the electric vehicle market, reducing its capital and transitioning it into an equity-method affiliate with local partners.

Target Company Overview

Isuzu Motors Limited, a prominent player in the automotive sector, has initiated a significant restructuring concerning its Chinese subsidiary, Isuzu (China) Engine Co., Ltd. This move aims to enhance operational efficiency and responsiveness in a rapidly evolving market characterized by a shift towards electric vehicle (EV) technology. The restructuring involves a reduction in the capital of Isuzu (China) Engine by approximately 1.22%. After this adjustment, Isuzu Motors will hold a 50% stake in the Chinese subsidiary, while its local partners, Qingling Group and Qingling Co., Ltd., will hold 30.43% and 19.57% respectively, transitioning the subsidiary from a consolidated entity to an equity-method affiliate.

As of the fiscal year ending December 2024, Isuzu (China) Engine reported revenues of approximately ¥16.5 billion, an operating profit of around ¥400 million, and net assets totaling approximately ¥43.9 billion. This restructuring is expected to yield special dividends of about ¥529 million for Isuzu Motors and come into effect in February 2026.

Industry Overview in China

The automotive industry in China has witnessed unprecedented growth over the past decade, revolutionizing both the domestic market and global supply chains. Fueled by a burgeoning middle class and increasing demand for personal mobility, manufactu