Prime Mover Magazine


Volvo plans to sell UD Trucks to Isuzu for $3.3B

Volvo Group has tentatively agreed to transfer ownership of the complete UD Trucks business to Isuzu Motors to accelerate growth by leveraging greater volumes and complementary capabilities.

This acquisition, according to Volvo Group, is the first step in establishing a global technology partnership for Isuzu Motors and UD Trucks in Japan to create a stronger, combined heavy duty truck business across international markets.

Volvo Group claims there is great complementarity between the two Groups from both a geographical and product line perspective, with further opportunities to be explored over time.

The enterprise value for the complete UD Trucks business is 250 billion JPY (approx. 3.32 billion AUD as per the end of November 2019) and will be subject to the final scope of the business transferred and Isuzu Motor’s due diligence.

The transaction is expected to, at the time of closing, result in a positive impact on the Volvo Group’s operating income of approximately 2.0 billion SEK (approx. $309.2 million AUD) and increase Volvo Group’s net cash position by approximately 22 billion SEK (approx. $3.4 billion AUD).

“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 Volvo Group President and CEO, Martin Lundstedt.

“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.

“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,” he said.

Isuzu Motors President and Representative Director, Masanori Katayama, said both groups strongly believe in their business opportunities and synergy potential.

“We intend to derive the full value from each other's different specialties across product and geographical strongholds,” said Katayama.

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

Volvo Group has outlined its strategic alliance with Isuzu Motors to include: the formation of a technology partnership which will leverage the parties’ 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; the creation of long-term conditions for a stronger heavy duty truck business for UD Trucks and Isuzu Motors in Japan and across international markets; and exploring opportunities for broader and deeper collaboration within the commercial vehicle business across geographical areas and product lines such as light and medium duty trucks.

Volvo Group clarified that nothing will change in the set-up for the Australian market or for its customers in the Australian market. "Hence we at Volvo Group Australia will continue to distribute the UD brand and support our UD Trucks Australia customers and dealer business partners."

Isuzu Australia Limited (IAL) Director and Chief Operating Officer, Andrew Harbison, said the potential of this tie-up for the global commercial vehicle landscape is significant.

“In Australia, our customers benefit from the deep understanding of the road transport industry and comprehensive product strategy of our parent company, Isuzu Motors Limited," he said.

“We then tailor this for the local conditions and our long-term leadership of Australian truck market is an endorsement of this customer-focussed approach.

“We look forward to providing more of what the transport and logistics industries need both now and into the future, and announcements such as this confirm that Isuzu Motors has its sights fixed well into the future also."

Volvo Group aims to transfer ownership of the complete UD Trucks business globally, which reportedly had revenues totalling SEK 24 billion (approx. $3.7 billion AUD) in 2018. The business, according to Volvo, had a minimal impact on the Volvo Group’s operating income in 2018.

All technology cooperation between the Volvo Group and Isuzu Motors will be managed through individual contracts.

The Memorandum of Understanding is non-binding. The next steps will be finalising the scope of the business to be transferred, due diligence by Isuzu Motors and negotiations of binding agreements. Signing of binding agreements is expected by mid-2020 and closing of the transaction is expected by the end of 2020. All potential transactions will be subject to regulatory and other approvals.

More to come as this story develops.

Featured Article

  • Slow burn

    Slow burn

    Commercial road transport has taken a more conservative approach to embracing lower viscosity lubricants than the automotive industry. With diesel engine oils now trending to thinner viscosities, SAE 30 grade engine oils like Shell Rimula Ultra 5W-30 offer solutions developed from the latest technology for fleet managers determined to reduce fuel burn and increase efficiencies across their trucks.

    Read Story

  • advertisement
  • Click here to join the CRT network today
  • Keep up to date on the latest news and developments in the commercial road transport industry. Sign up to CRT News today to receive a FREE weekly E-newsletter delivered straight to your inbox.


  • advertisement

© Copyright 2020 Prime Creative Media. All rights reserved.

Find us on Google+