Another consolidation among global truck makers is in the works. Sweden’s Volvo Group is selling its Japan-based UD Trucks business to Isuzu Motors, according to a joint Dec. 18 press release.

The proposed deal is included in a non-binding Memorandum of Understanding the two global OEMs have signed with the intent to form a strategic alliance “to capture the opportunities in the ongoing transformation of the industry,” which presumably includes the advent of electric trucks, the development new truck-based logistics solutions, and making further progress on autonomous driving systems.

The roughly $2.3 billion merger of the heavy-duty truck business of Isuzu Motors and UD Trucks (formerly long known as Nissan Diesel) in Japan and across international markets will entail transferring ownership of the complete UD Trucks business globally from Volvo to Isuzu, with an eye to accelerating growth by leveraging volumes and complementary capabilities.

Volvo Group stated that UD Trucks’ global business “had a minimal impact on the Volvo Group’s operating income in 2018.” The sale, per the OEMs, is expected to, at the time of closing, “result in a positive impact on the Volvo Group’s operating income.”

“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,” said Martin Lundstedt, president and CEO of Volvo Group. We see great potential to extend our cooperation within technology, sales and service as well as other areas going forward.” 

“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. “Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution.”

Along with repositioning UD Trucks within Isuzu Motors, the intended strategic alliance plans to:

• Form a technology partnership that will leverage the OEMs’ “complementary areas of expertise within both well-known and new technologies as well as to create a larger volume base to support necessary, forthcoming technology investments.”

• Create the “best long-term conditions for a stronger heavy-duty truck business” for UD Trucks and Isuzu Motors in Japan and across international markets.

• Explore opportunities for broader and deeper collaboration within the commercial vehicle business across geographical areas and product lines, such as light- and medium-duty trucks. 

The Memorandum of Understanding is non-binding. Next steps will involve finalizing the scope of the business to be transferred, due diligence by Isuzu Motors, and negotiations of binding agreements. The OEM said that the signing of binding agreements is expected by mid-2020 and the transaction is expected to close by the end of 2020.