Volvo Group and Isuzu ink strategic alliance

UD Trucks - sold by Volvo to Isuzu - is at the centre of the future strategic partnership

UD vehicles – sold by Volvo to Isuzu – is at the centre for the future strategic partnership

The Volvo Group (AB Volvo, the commercial group which includes heavy commercial cars) and Isuzu Motors today signed binding agreements to create a strategic alliance within commercial vehicles to be able to capture ‘opportunities in the ongoing industry transformation’, according to the MoU signed in December 2019.

The agreements consist of Isuzu Motor’s purchase of UD Trucks through the Volvo Group for an enterprise value of JPY 243 billion (approx. SEK 20 billion). The transaction is at the mercy of particular conditions, including approval from regulatory authorities.

The Alliance involving the Volvo Group and Isuzu Motors is defined to a create long-term and robust relationship that may encompass but not be limited by:

  • Forming a technology partnership, meant to leverage the events’ complementary regions of expertise within both well-known and brand new technologies and producing a larger amount base to aid assets for world-class technology. The technology partnership encompasses:

– Joint development by Isuzu Motors and UD Trucks of typical platforms for medium heavy-duty vehicle models the Japanese- as well as other Asian markets, using and others Volvo Group technology.

– Intended cooperation regarding new technologies particularly autonomous driving, connectivity and medium- and heavy-duty electric automobiles.

  • Creating the very best long-lasting conditions for a stronger heavy-duty vehicle company for UD Trucks and Isuzu Motors in Japan and across international areas by transferring ownership for the complete UD Trucks company through the Volvo Group to Isuzu Motors. This can speed up growth by leveraging greater volumes and complementary capabilities, creating significant synergies for Isuzu Motors.

As an initial action, Isuzu Motors and UD Trucks are speaking about the conditions for supply of particular truck variations from UD Trucks to Isuzu Motors from 2022 onwards. To secure smooth company extension, the Volvo Group provides transitional solutions to UD Trucks, and supply elements to UD Trucks.

  • Exploring further opportunities even for broader and deeper collaboration within the commercial vehicle organizations across geographical areas and product lines for future metropolitan logistics solutions. Isuzu Motors is amongst the world-leaders inside portion of 3.5 to 15T light and medium-duty trucks with volumes of 252 000 devices in 2019.
  • Checking out cooperation in the regions of purchasing and logistics, leveraging typical technology, plus the geographic footprint complementarity and amount expansion.

The Volvo Group and Isuzu Motors will establish a Joint Alliance Office, with facilities both in Japan and Sweden, that will be overseen by an Alliance Board comprising the Isuzu Motors President, the Volvo Group CEO along with other key professionals from two groups.

The two organizations say there was great complementarity between the Volvo Group and Isuzu Motors from both a geographical and manufacturer product line viewpoint. The two organizations have actually finalized an Alliance Framework Agreement for the very least length of two decades, to use up the number of choices and challenges for the logistics industry of the future, maximizing value and advantages for customers and for society.

“I have high expectations on this strategic alliance, which could make Volvo and Isuzu Motors even more competitive inside their particular areas and sections. This is certainly a way to share technology investments and also to help one another grow. I’m confident that UD Trucks can be a bridge between the Volvo Group and Isuzu Motors and that the strategic alliance will create the conditions to continue to produce UD vehicles to a new degree within Isuzu Motors. I would also like to express my pride at the way the UD Trucks group happens to be capable provide customers and continue to enhance monetary performance also with this unprecedented duration, characterized by the COVID-19 pandemic. The Volvo Group will continue to help UD Trucks, and take part in the Asian markets through this alliance,” stated Martin Lundstedt, President and CEO associated with Volvo Group.

Masanori Katayama, President and Representative Director of Isuzu Motors Limited, said: “this is certainly a tremendously exciting day. We have signed the strategic alliance contract utilizing the Volvo Group. The difficult and unforeseeable COVID-19 situation has made the strategic alliance more valuable and contains built a solid, trustful relationship between Isuzu together with Volvo Group. This long-lasting partnership will span across services and products, technologies and areas, and actively subscribe to solution improvements and strengthened customer care along with supporting the logistics industry. I am lucky to own UD vehicles joining the Isuzu Group. UD Trucks will play a crucial role of the strategic alliance for efficient and effective collaboration between Isuzu Motors and the Volvo Group.”

The consented cost on a money and debt free basis, enterprise value, for UD Trucks is JPY 243 billion (approx. SEK 20 billion) to be paid to Volvo during the closing of transaction. Moreover, the agreement includes an earnout, which one more amount as much as JPY 15 billion (approx. SEK 1.2 billion) is to be paid at the mercy of the performance of UD Trucks throughout the years 2021-2023. UD Trucks’ profits during the last 12 months (July 2019-June 2020) amounted to JPY 278 billion (approx. SEK 23 billion). Business had a marginally positive impact on the Volvo Group’s running income in identical period. At the time of closing, the deal is anticipated to result in a confident affect the Volvo Group’s working earnings of around SEK 2 billion and increase the Volvo Group’s net money place within the Industrial operation by about SEK 20 billion. Closing is expected throughout the very first half of 2021. The deal is at the mercy of specific conditions, including approval from regulatory authorities.

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