Isuzu Motors - Company History

The Hino separation that created an eighty-year rival

Isuzu's origins run back to two engineering firms that moved into car manufacturing between the end of the Meiji era and the Taisho years. Tokyo Ishikawajima Shipbuilding (東京石川島造船所), established in 1889, began studying car manufacture in 1916[1], tied up with Wolseley Motors of Britain in 1918, and in 1920 built a new car plant at Tomikawacho in Fukagawa ward, where it assembled and then manufactured the Wolseley A9 saloon[2]; in 1922 it completed the first car that could be called domestically built, even though the raw stock was still imported[3]. Passenger-car manufacture was judged premature and was halted before long, after which the emphasis moved to lorries and sales volumes grew, and in 1927 the Wolseley contract was dissolved amicably[4]. The other parent, Tokyo Gas and Electric Industry (東京瓦斯電気工業), established in 1910, also took up car manufacture from 1916 and built military goods vehicles[5]. Ishikawajima Shipbuilding spun its automotive division out in 1929 as Ishikawajima Jidosha Seisakusho, and in 1933 merged it with DAT Jidosha Seizo to form Jidosha Kogyo[6].

In April 1937, under the direction of the Ministry of Commerce and Industry and the Army, the automotive division of Tokyo Gas and Electric Industry and DAT Jidosha Seizo were brought together and Tokyo Jidosha Kogyo was founded[7]. Its predecessor Ishikawajima Shipbuilding carried an accumulation of diesel-engine expertise, and the Diesel Engine Research Committee set up in 1934 became the technical foundation for domestically built diesel commercial vehicles. In 1938 the company opened a new plant at Kawasaki[8] and began volume production of lorries above eleven tonnes gross vehicle weight; in 1941 it renamed itself Diesel Jidosha Kogyo (ヂーゼル自動車工業) and strengthened munitions production on a nationwide scale[9]. At the Army's request it built a dedicated tank factory at Hino in Tokyo — but the parent company answered to the Ministry of Commerce and Industry while the Hino works came under direct Army control, and that divided jurisdiction bred serious friction inside the organisation.

In 1942 the Hino works was separated off as Hino Heavy Industries[10], and during the post-war dissolution of the zaibatsu Isuzu was required to sell in full the Hino shares it had inherited. The two companies that wartime rationalisation had bound together thus parted ways, and Isuzu had itself created the competitor that would contest the same ground — domestically built diesel commercial vehicles. After the war it resumed production, announcing the TX80 petrol lorry in 1946[11] and putting in place a nationwide network of seventeen franchised distributors[12]. In May 1949 Diesel Jidosha Kogyo listed on the Tokyo Stock Exchange, and in July of the same year it changed its name to Isuzu Motors[13], starting again on the plant and the body of engineers that the wartime state-directed merger had accumulated. In 1955 it described its own management policy in these terms: ours is a company whose motto is soundness. We labour day and night at the rationalisation no one sees, but we do not go in for expansion on a grand scale[14] — a cautious line, conscious of competing with Hino, that became the keynote of its management.

The Elf's success and the side effects of investing in passenger cars

With the post-war conversion to civilian demand, Isuzu resumed the development and volume production of diesel commercial vehicles in 1947, and in 1953 signed a technical tie-up with the Rootes Group of Britain to begin knock-down production of the Hillman Minx, a medium saloon, at Kawasaki in Kanagawa[15]. By 1957 the Hillman had been fully localised[16], carrying the passenger-car business forward from imported technology to volume production of its own. The Elf light lorry, launched in 1959[17], became the definitive Japanese light diesel commercial vehicle and took a dominant position in parcel delivery and in the working fleets of smaller firms; in 1961 the Bellel diesel saloon followed. In 1962 the company opened the Fujisawa plant in Kanagawa, at 345,000 tsubo one of the largest sites in the country, and put a volume production system in place[18]. In 1966 it established Isuzu Motors Co. (Thailand) near Bangkok and began local assembly, building on the distribution network Mitsubishi Corporation had put in place there ahead of it[19].

In the second half of the 1960s Toyota and Nissan pressed hard with passenger cars, and Isuzu's investment in a passenger-car business of its own had the opposite of the intended effect: it delayed the build-out of the commercial-vehicle distribution network and the strengthening of the products. Its share of the domestic lorry market fell from the 30 per cent range in the early 1960s to below 25 per cent by the end of the decade, and in 1969 the lorry business fell into loss on a parent-company basis[20]. As the 1970s opened, with the American big three moving into Japan and capital liberalisation approaching, the trade press ran headlines predicting a capital realignment — Toyota? Nissan? Ford?[21] — alongside a Nihon Keizai Shimbun report of 11 January 1970 that Ford and Toyo Kogyo move towards a capital tie-up. The ground under Isuzu's position as a commercial-vehicle specialist was shifting, and by the time the GM talks moved into earnest in 1971[22] its management had concluded that an outside alliance was indispensable, in capital and in technology alike.