Volvo set to sell UD Trucks unit to Isuzu as part of strategic alliance

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The Volvo Group and Isuzu Motors on Wednesday signed a non-binding Memorandum of Understanding signaling their intent to form a strategic alliance charged with establishing a global technology partnership.

Volvo Group and Isuzu Motors already have an existing relationship on medium-duty trucks in Japan and Volvo Group President and CEO Martin Lundsted said his company sees potential to extend that “cooperation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners,” he said. “Our UD Trucks colleagues have done a great job to improve performance in recent years and the alliance opens up a great opportunity to continue the successful journey.”

The genesis of the expanded partnership will continue to be in Japan, one of the most competitive truck markets in the world but mostly dominated by Toyota-owned Hino. The duo hopes the partnership will create a stronger heavy-duty truck business for both Isuzu Motors and the Volvo-owned UD Trucks. Ownership of UD Trucks, a $2.28 billion business, will be transferred from the Volvo Group to Isuzu Motors “in order to accelerate growth by leveraging greater volumes and complementary capabilities,” the companies announced in a joint release Wednesday morning.

“Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two Groups,” added Masanori Katayama, President and Representative Director of Isuzu Motors Limited. “We intend to derive the full value from each other’s different specialties across product and geographical strongholds. Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution,”

The strategic alliance between the two truckmakers will include the formation of a technology partnership, leveraging the parties’ complementary areas of expertise within both well-known and new technologies as well as to create a larger volume base to support necessary, forthcoming technology investments; creation of a long-term conditions for a stronger heavy-duty truck business for UD Trucks and Isuzu Motors in Japan and across international markets; and the exploration of opportunities for broader and deeper collaboration within the commercial vehicle business across geographical areas and product lines, such as light- and medium-duty trucks.

All technology cooperation between the Volvo Group and Isuzu Motors will be managed through individual contracts.