Isuzo Motor Case Solution

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  • Topic: Industrial engineering, Design for X, Costs
  • Pages : 18 (6253 words )
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  • Published : May 8, 2013
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Isuzu Motors, Ltd.: Cost Creation Program
Isuzu Motors, Ltd. (Isuzu) traced its origins back to 1916, when the Tokyo Ishikawajima Shipbuilding and Engineering Co., Ltd., began to manufacture automobiles. The division merged with Dat-Auto in 1933 and changed its name to Motors, Inc. In 1937, it merged with Auto Manufacturing, a division of Tokyo Gas and Electricity, Inc., to form Tokyo Motors. The firm's name was changed to Isuzu Motors in 1949. In 1992, Isuzu was the ninth-largest automobile company in Japan, based upon units produced. Isuzu recognized 10 domestic competitors. The largest four were Toyota, with a 32% market share; Nissan, with 17%; Mitsubishi, with 11%; and Mazda, with 10%. The other six players shared the remaining 30%. Honda, Suzuki, Daihatsu, and Fuji Heavy Industries were all larger than Isuzu, which had a 4% market share. Only Hino and Nissan Diesel were smaller, with a 0.7% and 0.4% market share, respectively. Isuzu's market share was somewhat misleading because it averaged out the firm's strong market position in trucks and buses with its weak position in the higher-volume passenger car market. The same was true of both Hino and Nissan Diesel. Isuzu had 1992 sales of V1,200 billion, up from Y769 billion in 1984, making it the sixthlargest Japanese automobile firm in terms of sales. During that period, both the percentage of vehicles exported and the mix of vehicles sold remained fairly constant. Exports accounted for approximately 49% of sales, while heavy-duty trucks accounted for 23%, light-duty trucks and buses for 34%, passenger cars for 14%, and parts, engines, and components for the remaining 29% of sales. Isuzu's market share in heavy- and light-duty trucks was just over 10%, making it the fourthlargest in the domestic Japanese market. Its major competitors were Toyota, Mitsubishi, and Nissan, with market shares of 24%, 14%, and 11%, respectively. Isuzu had a slightly higher share of the bus market-11%—which made it the fifth-largest Japanese bus manufacturer. Its major competitors were • Toyota, Mitsubishi, Hino, and Nissan, with market shares of 26%, 24%, 19%, and 13%, respectively. Only in light trucks was Isuzu the market leader, with a market share of 35%.

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With respect to medium- and heavy-duty trucks (exceeding 6.1 tons in gross vehicle weight), Isuzu had a 33% market share in Japan in 1992, and was the second-largest manufacturer in the world after Mercedes-Benz. Isuzu's share in Japan was also 33% for 2-ton trucks, which was by far the largest sector of the Japanese truck market. In fact, until 1993, Isuzu had been the top-ranking Japanese firm in this sector for 23 consecutive years. Production was done at four domestic plants. The oldest plant was located in Kawasaki, 10 miles from Tokyo. The facility manufactured heavy- and light-duty trucks and buses as well as heavy-duty industrial engines. The Kawasaki facility was built in 1937 and for 25 years was Isuzu's sole production facility. After 1962, the firm began to expand aggressively and opened four other manufacturing facilities. The Fujisawa plant, also located in the Kanagawa prefecture, was built in 1962. It produced light-duty trucks, buses, and passenger cars as well as light-duty industrial engines and components. The Tochigi plant was located in the Kanagawa prefecture some 50 miles from Tokyo. It was built in 1972 to produce engines and driveline components for the firm's product line. Later, the plant was expanded to cope with Isuzu's increased sales volume. The Hokkaido plant was located in the Hokkaido prefecture, about 800 miles north of Tokyo. It was built in 1984 to manufacture engines for passenger cars and had the capacity to build approximately 200,000 engines a year. Many of these engines were sold to other automobile manufacturers, both domestic and international, including Opel (General Motors' European subsidiary) and General Motors in the United States. In 1991, Isuzu was unprofitable for the first...
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