Fuji Heavy Industries Takes Control of Subaru-Isuzu Automotive

TORONTO, Oct. 31, 2002; Fuji Heavy Industries, the maker of Subaru automobiles and a global manufacturer of transportation and aerospace-related products, has reached an agreement with Isuzu Motors Ltd. to acquire all of Isuzu's stock holdings in Subaru-Isuzu Automotive (SIA). The deal will see Fuji Heavy Industries (FHI) take complete control over the Subaru-Isuzu Automotive Inc., a joint venture manufacturing company based in Lafayette, Indiana.

Isuzu now owns 49 percent of the joint venture, which will become a wholly owned subsidiary of Fuji Heavy Industries Ltd. on January 1, 2003. Under the plan FHI will supply Isuzu's North American dealers with 30,000 Rodeos and Axioms a year from the plant. Isuzu produced 68,542 sport-utilities for its own use at Subaru-Isuzu Automotive last year but has said it will slash output to about 28,000 this year.

John Crawford, Vice President of Sales for Subaru Canada, Inc. comments, "Up until now, we have been concerned about Isuzu's financial problems and its future ability to continue as a strong partner at our Lafayette plant. The purchase by Fuji has now cured our concerns on future production capabilities. The demand for Subaru automobiles continues to grow, so we are pleased to have a reliable production supply".

Isuzu reports it will cut more than half of the 330 employees at its U.S. sales operations as part of a restructuring and cost cutting plan. All of its 900 SIA workers will transfer to FHI.

Isuzu said it expects to post a loss of (Yen) 170 billion on a consolidated basis, or about $1.4 billion US Dollars at current exchange rates as it takes a one-time charge of $1.5 billion US mainly from its restructuring in North America.

Subaru Canada, Inc. is a wholly owned subsidiary of FHI of Japan. Headquartered in Mississauga, Ontario, the company markets and distributes Subaru vehicles, parts and accessories through a network of 100 franchised dealers across Canada. All Legacy, Outback and Baja models sold in Canada are manufactured at SIA.