01/31/08

So long, Joe Isuzu.

Isuzu, the Japanese automaker known for its "Joe Isuzu" commercials featuring a chronic-liar car salesman, has finally conceded they are quitting the US car market.

The Oldsmobile closing experiment provided one big lesson: a dying brand is best allowed to wither away. Abrupt termination leaves a company open to lawsuits from bag holders - customers and dealers.

So, despite repeated reassurances that there were no plans to exit the US market, Isuzu Motors America has made a "surprise" announcement that it will discontinue stateside passenger vehicle sales by 2009.

The exit strategy was predictable to industry observers; mounting losses, falling sales, capital flight, short-term credit lines sought to avoid bankruptcy, ad budget disappearing, chronic badge engineering, and smarter dealers scrambling to escape.

The go-slow approach has limited Isuzu's projected closing costs to a minuscule $37 million.

US sales peaked at 127,630 Isuzus back in 1986, during the Joe commercials heyday.

In 1999, Isuzu sold 103,629 vehicles as the SUV craziness began to fade.

Isuzu sold just 7098 vehicles here in 2007, falling 17% year over year.

Amazingly, the brand had a core of loyal customers who loved Joe Isuzu.

These buyers are now left holding the bag.

Izusus have long been known for off-a-cliff depreciation, just try to sell/trade one now.

Isuzu promises it will honor warranties and "encourage" its nearly 200 remaining dealers to provide service.

"Isuzu will discontinue the sales of vehicles only. Our parts and service operation will remain fully functional,"
"We expect the vast majority of our dealers will continue as service-only."

Terry Maloney, President, of Isuzu North America

Joe Isuzu, I believe you.

Culture Gap

The demise of Isuzu also illustrates a problem of corporate cultural inflexibility in global markets. Even Toyota could learn something here.

Isuzu, headquartered in Tokyo, despite the clever ad campaigns, never bridged the culture gap with American consumers. Look at the english-as-a-second-language content of corporate websites.

GM and Isuzu are longtime collaborators, GM began investing in 1971. By 1999 GM held 49%, which should have been more than enough to control the company.

But the Japanese legal and business culture resisted stubbornly, and GM, unable to install American executives, could only concede defeat, pulling the plug in 2001.

Recent US executive defections from Toyota show the persistence of this problem in Asia.

The attack from Consumer Reports, which rated second generation (1995-1997) Trooper models "Not Acceptable" due to agressive roll over testing, also hurt Isuzu.

Isuzu products, Ascender SUVs and i-series pickups, were blatantly rebadged Chevrolet TrailBlazer/GMC Envoy, and Chevrolet Colorado/GMC Canyon.

As these dogs approached the end of their lifespans, the company had no product. How was this a "suprise?"

Isuzu is primarily a manufacturer of medium duty commercial trucks. They are also an experienced small diesel manufacturer.

Toyota has acquired 6% of Isuzu, anticipating the coming small turbo-diesel boom.

So don't cry for Joe Isuzu, the lovable liar.

One canary has toppled in the mineshaft. Who is next?

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