GM will purchase 232.5 million new equity shares to be issued by Isuzu to hike its stake, thereby further cementing their 17-year old relationship.

"This agreement will enhance the ability of the two companies to work even closer. With this agreement, Isuzu assumes an even more important role as an equal partner within GM's global alliances," GM chairman John F Smith Jr said here in a statement on Friday.

Smith said the new share equity percentage symbolised GM's confidence in Isuzu's management and respect for its independence.

"It is because of this confidence and respect that there will be no changes to the Isuzu management team with this agreement," he said.

Because of Isuzu's expertise in commercial vehicles and diesel engines, the company would play an important rolein GM's global commericial vehicle development and integration process.

In future GM would use Isuzu-based platform to design cab, chasis and vehicles, the statement said.

GM, world's largest automobile maker, had earlier hiked its stake in Suzuki Motor Corporation to ten per cent from 3.3 per cent.

Isuzu chairman Kazuhira Seki said "the agreement would help us achieve our long-cherished goal of becoming world's leading commercial vehicle and diesel engine manufacturer."

Seki said the funds generated by the capital increase would be actively invested in GM projects and used to strengthen Isuzu's future competitive position.

The GM-Isuzu tieup also envisage supply of pick up trucks and commercial vehicles and designation of Isuzu as the `GM Centre of Expertise (COE) for diesel engines.'

"The relatively new role of Isuzu as COE for diesel engines and its expanded role within the commercial vehicle field is indicative of the growing importance that Isuzu plays in GM's global business strategies,"Smith said.

Both the companies started their relationship with a capital agreement in 1971.

Since then, GM and Isuzu have enjoyed mutually beneficial relationship in various business fields like component supply, cooperative development of commercial vehicle and production collaboration.