Last year, Volvo and Isuzu announced that they were going to forge a strategic alliance in order to boost their technology and market share. To do that, the two companies signed a non-binding Memorandum of Understanding (MoU) with the intent of forming a partnership within commercial vehicles.
This will involve Volvo selling the ownership of UD Trucks to Isuzu Motors, as well as exploring deeper collaborations within the commercial vehicle business between the two companies. But just how much will Volvo Group (not Volvo Cars which is owned by Geely) gain from selling UD Trucks to Isuzu? And what does Isuzu plan on doing with UD Trucks once the purchase is final?
To answer the first question, Isuzu Motors recently announced that they have finished signing the final agreements with Volvo in order to form the strategic alliance. The two companies have signed an Alliance Framework Agreement for a minimum of 20 years in order to take up the possibilities and challenges of the logistics industry of the future, maximizing value and benefits for customers as well as for society.
With it, Isuzu Motors will buy UD Trucks for a whopping JPY 243 billion (or around PhP 112 billion). The transaction is not yet final, however, as it is subject to certain conditions, including approval from regulatory authorities.
As to the second question, Isuzu Motors and UD Trucks will discuss the conditions for the supply of certain truck variants from UD Trucks to Isuzu Motors from 2022 onwards. To help smoothen business transactions, the Volvo Group will provide transitional services to UD Trucks, as well as supply components to UD Trucks.
“I have high expectations on this strategic alliance, which will make Volvo and Isuzu Motors even more competitive within their respective markets and segments. This is an opportunity to share technology investments and also to help each other grow. I am confident that UD Trucks will become a bridge between the Volvo Group and Isuzu Motors and that the strategic alliance will create the conditions to continue to develop UD Trucks to a new level within Isuzu Motors,” said Martin Lundstedt, president and CEO of the Volvo Group.
As for Isuzu, they are confident that the long-term partnership will help both companies across products, technologies, and regions; as well as contribute to the strengthening of the logistics industry.
“This is a very exciting day. We have signed the strategic alliance agreement with the Volvo Group. The difficult and unforeseeable COVID-19 situation has made the strategic alliance even more valuable and has built a solid, trustful relationship between Isuzu and the Volvo Group. This long-term partnership will span across products, technologies, and regions, and actively contribute to service improvements and strengthened customer satisfaction as well as supporting the logistics industry,” said Masanori Katayama, president, and representative director of Isuzu Motors Limited.
With the final agreements signed, Isuzu Motors and Volvo will establish a Joint Alliance Office (JAO), with facilities in both Japan and Sweden. They will be overseen by an Alliance Board that is comprised of Isuzu Motors president Masanori Katayama, Volvo Group CEO Martin Lundstedt, and other key executives from the group.