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Heavy-duty

Volvo Group, Isuzu Motors sign agreements to form strategic alliance

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David Sickels is the Senior Editor of Fleet Equipment. He has a history of working in the media, marketing and automotive industries in both print and online.

The Volvo Group and Isuzu Motors have signed binding agreements to form a strategic alliance within commercial vehicles, in accordance with the Memorandum of Understanding signed in December 2019.

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The agreements include Isuzu Motors’ acquisition of UD Trucks from the Volvo Group for an enterprise value of JPY 243 billion (approx. $2.31 billion). The transaction is subject to certain conditions, including approval from regulatory authorities.

The companies say the alliance includes forming a technology partnership, intended to leverage the parties’ complementary areas of expertise within both well-known and new technologies and creating a larger volume base to support investments for world-class technology. The companies say the technology partnership encompasses:

  • Joint development by Isuzu Motors and UD Trucks of common platforms for medium heavy-duty truck models for the Japanese and other Asian markets, utilizing amongst others Volvo Group technology.
  • Intended cooperation regarding new technologies such as autonomous driving, connectivity and medium- and heavy-duty electrical vehicles.
  • Creating the best long-term conditions for a stronger heavy-duty truck business for UD Trucks and Isuzu Motors in Japan and across international markets by transferring ownership of the complete UD Trucks business from the Volvo Group to Isuzu Motors. This will accelerate growth by leveraging greater volumes and complementary capabilities, creating significant synergies for Isuzu Motors.
  • As a first step, Isuzu Motors and UD Trucks are discussing the conditions for supply of certain truck variants from UD Trucks to Isuzu Motors from 2022 onwards.
  • To secure smooth business continuation, the Volvo Group will provide transitional services to UD Trucks, and also supply components to UD Trucks.
  • Exploring further opportunities for even broader and deeper collaboration within the commercial vehicle businesses across geographical areas and product lines for future urban logistics solutions.
  • Exploring cooperation in the areas of purchasing and logistics, leveraging common technology, as well as the geographical footprint complementarity and volume expansion.

The Volvo Group and Isuzu Motors will establish a joint alliance office, with facilities both in Japan and Sweden, which will be overseen by an alliance board comprising the Isuzu Motors president, the Volvo Group CEO and other key executives from the two groups. The two companies have signed an Alliance Framework Agreement for a minimum duration of 20 years.

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Closing is expected during the first half of 2021. The transaction is subject to certain conditions, including approval from regulatory authorities.

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