Isuzu likely to use HM’s Chennai unit to assemble SUV, pick-up

February 1, 2013: Hindustan Motors’ (HM) which recently decided to demerge and transfer its Chennai car plant as a going concern to its fully-owned arm, Hindustan Motor Finance Corporation (HMFCL), may likely offer this facility to Isuzu of Japan as part of a larger business arrangement which now includes the assembly of vehicles for Mitsubishi, a co-owner of Isuzu.

Mitsubishi assembles a variety of cars and SUVs but only the Pajero Sport, assembled from CKD kits since last November, has recorded significant numbers. If the deal with Isuzu goes through, it could assemble an SUV – the MU-7 – here that could be launched in India later this year. According to an industry source, Isuzu initiated talks with HM a few years ago to assemble its SUV and pick-up truck at the Chennai plant. This time around, both parties may have arrived at some a pact. Isuzu is also looking at launching its D-Max pick-up in India.

Given Isuzu’s expertise in building pick-up trucks and light commercial vehicles, the company may be more aggressive in the light commercial vehicle space rather than SUVs, says a source. Isuzu has appointed a dealer each in New Delhi and Hyderabad, a clear indication of a plan that is being implemented.

The Isuzu MU-7 will compete with the likes of the Toyota Fortuner and SsangYong Rexton in India. The Rexton was launched last October and the Innova, a formidable player, sells in the region of 6,500 units a month. But in a cost-conscious market and given the ‘partial’ liberalisation of diesel, a competitively priced vehicle can rake in the numbers.

The Chennai plant is almost as an independent entity. It is a modern facility and is highly under-utilised. “The current capacity can be easily ramped up to 24,000 a year,” says a source. Mitsubishi, it is learnt, had discussions with HM to pick up an equity stake in HM before the global meltdown in 2008-09. It is possible that Mitsubishi may be interested again, since it is considering setting up its own marketing and sales team in India. Mitsubishi may also launch its small car, Mirage, in India.