Volvo Group and Isuzu Motors Sign Agreements to Capture Ongoing Opportunities

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The Volvo Group and Isuzu Motors have signed binding agreements in order to form a strategic alliance withing commercial vehicles. The primary goal here is to capture the opportunities in the ongoing industry transformation in accordance with the MoU signed in last year’s December. The agreement also includes Isuzu’s acquisition of UD trucks from the Volvo Group for an enterprise value of JPY 243 billion. The transaction is subject to certain conditions, including approval from regulatory authorities.

A Joint Alliance Office will be set up by the Volvo Group and Isuzu Motors with facilities in Sweden as well as in Japan to be monitored by an Alliance Board composed of the President of Isuzu Motors, the CEO of Volvo Group, and other key executives.

The Volvo Group and Isuzu Motors will have benefits from both a geographical and a product line point of view. Both companies have signed an Alliance Framework Agreement for a period of 20 years to meet potential logistics market opportunities and challenges and to optimize value and social benefits for both consumers and communities.

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The long-term and robust partnership is set to:

  • 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 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 electric 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 the 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. Isuzu Motors is one of the world-leaders in the segment of 3.5 to 15T light and medium-duty trucks with volumes of 252 000 units in 2019.

  • Exploring cooperation in the areas of purchasing and logistics, leveraging common technology, as well as the geographical footprint complementarity and volume expansion

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“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. I also want to express my pride at how the UD Trucks team has been able to serve customers and continue to improve financial performance also during this unprecedented period, characterized by the COVID-19 pandemic. The Volvo Group will continue to support UD Trucks, and participate in the Asian markets through this alliance,” says Martin Lundstedt, President and CEO of the Volvo Group.

“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. I am fortunate to have UD Trucks joining the Isuzu Group. UD Trucks will play an important role in the strategic alliance for efficient and effective collaboration between Isuzu Motors and the Volvo Group,” says Masanori Katayama, President and Representative Director of Isuzu Motors Limited.

Autonomous vehicles, electrifications, shared mobility, Artificial Intelligence, Big Data & Data Analytics current reside within the top innovative trends in the automotive industry. Data-as-a-service is also poised to witness growth post-covid. Subscription-based service models are also likely to grow rapidly in developing markets. Further, reduction in carbon footprint, the return of Hatchback and new body styles, and rebirth of the used car market are also set to make their mark in the industry.

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