Isuzu Motors to Create Strategic Alliance with Volvo Group

It seems Japan has gone Swedish--or Sweden has gone Japanese. However you want to put it, a new, powerful merger in the area of commercial vehicle manufacture happened between the Isuzu Motors and Volvo Group.

Volvo is selling its Japan-based, truck business to Isuzu Motors for a price of $2.3 billion. And their objective? To get a better edge in high-tech trucking technology.

"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 Lundstedt, President and CEO of the Volvo Group.

Strategic Plans

Their first plan is to set up a global technology merger where they will use not just the current available technologies existing today, but also new, more advanced systems that will strengthen their heavy-duty truck business across international markets. One way they will do this is to completely transfer Volvo Groups'  SEK 24 Billion (PHP129 Billion) global trucking business to Isuzu Motors.

"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."

Another plan is to expand their opportunities across geographical areas and product lines, including light- and medium-duty trucks.

Jumping the "Collaboration" Bandwagon

Volvo and Isuzu's partnership is just one of the latest automotive companies that are joining forces to compete toe-to-toe with the competition and strengthen its customer base.

"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, " said Masanori Katayama, President and Representative Director of Isuzu Motors Limited.

"Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution," he added.

Currently, both companies have just signed a non-binding Memorandum of Understanding that seeks to acquire a significant portion of the commercial vehicle market in the industry. The next step after this signing will be finalizing the scope of the business to be transferred, due diligence by Isuzu Motors and negotiations of binding agreements.

The two companies' signing of binding agreements is expected by mid-2020. Meanwhile, finalizing the transaction is expected to be at the end of 2020.

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