Volvo and Isuzu plan collaboration in the commercial vehicle market

19 December 2019

Volvo and Isuzu Motors have signed a Memorandum of Understanding (MoU) with the intent to form a strategic alliance in the commercial-vehicle market.

The two companies are looking to capitalise on the potential opportunities a collaboration brings in a changing automotive market. Their first step will be to establish a global technology partnership and to create a stronger, combined heavy-duty truck business for Isuzu Motors and UD Trucks in Japan and across international markets. This will entail transferring ownership of the complete UD Trucks business globally from the Volvo Group to Isuzu Motors.

Stronger together

This move will have a limited impact on Volvo Group’s profits, with the UD Trucks business not a significant contributor to the carmaker’s cash flow.

The intended strategic alliance between the Volvo Group and Isuzu Motors will also include:   

• Forming a technology partnership, which will leverage 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. 
• 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. 
• Exploring opportunities for even broader and deeper collaboration within the commercial vehicle business across geographical areas and product lines, such as light- and medium-duty trucks. 

Extension potential

″The Volvo Group and Isuzu Motors have a well-established relationship on medium-duty trucks in Japan based on mutual respect, shared values and win-win spirit. We see great potential to extend our cooperation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners,″ says Martin Lundstedt, president and CEO of the Volvo Group. ″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.″ 

″Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two Groups. We intend to derive the full value from each other’s different specialities 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,” adds Masanori Katayama, president and representative director of Isuzu Motors Limited.

The MOU is non-binding, the companies state. The next steps will be to finalise the scope of the business to be transferred, due diligence by Isuzu Motors and negotiations of binding agreements. The signing of these is expected by mid-2020 and closing of the transaction is expected by the end of 2020, subject to regulatory approvals.