Volvo and Isuzu are looking to boost their technology and market share in the commercial and heavy truck business. Recently, the two companies recently signed a non-binding Memorandum of Understanding (MoU) with the intent to form a strategic alliance within commercial vehicles.

With it, Isuzu and Volvo plan to capture opportunities in the ongoing transformation of the industry, as well as help each other in terms of sharing tech and creating a long-term alliance.

In its first step, the two companies plan to share technologies that will leverage the parties' areas of expertise. Apart from that, the non-binding MoU will also see the two companies create a long-term and stronger business solution for UD Trucks and Isuzu Japan across international markets. This will involve the transfer of ownership of UD Trucks from the Volvo Group to Isuzu Motors in order to accelerate growth by influencing bigger volumes. Finally, Volvo and Isuzu will also explore broader and deeper collaborations within the commercial vehicle business.

Volvo to sell UD Trucks to Isuzu and forge strategic alliance image

“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,” said Martin Lundsted, president and CEO of the Volvo Group.

As for Masanori Katayama, president and representative director of Isuzu Motors Limited, he said that the company believes that the collaboration with Volvo will contribute greatly to improving service and strengthening customer satisfaction amidst the forthcoming logistics revolution.

Volvo to sell UD Trucks to Isuzu and forge strategic alliance image

“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 specialties across product and geographical strongholds,” added Katayama.

Volvo Group and Isuzu Motors will be finalizing the non-binding agreements, as well as the transfer of UD Trucks in due diligence. The official signing of the MoU is expected to be conducted some time in mid-2020. Meanwhile, the closing of the transaction is expected to be finished by the end of next year.