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By MT Bureau| Oct 30, 2020

Volvo and Isuzu Sign Final Agreements To Form Strategic Alliance

To capture the opportunities in the ongoing industry transformation, in accordance with the Memorandum of Understanding signed in December 2019, Volvo Group and Isuzu Motors signed binding agreements to form a strategic alliance. The agreements include Isuzu Motor's acquisition of UD Trucks from the Volvo Group for an enterprise value of JPY 243 billion (approx. SEK 20 billion). The transaction is subject to certain conditions, including approval from regulatory authorities.

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

The Alliance between the Volvo Group and Isuzu Motors is set to a build long-term and robust relationship that will encompass but not be limited 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. It also intended to cooperate regarding new technologies such as autonomous driving, connectivity and medium- and heavy-duty electrical 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 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.

The cooperation will explore 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. Besides, it will look in to the areas of purchasing and logistics, leveraging common technology, as well as the geographical footprint complementarity and volume expansion.  (MT)

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