Japan’s Isuzu Motors is set to buy Volvo AB’s UD Trucks business, which has an enterprise value of $2.3 billion, and tie up with the Swedish firm to cut costs and develop electric and self-driving technologies.
The tie-up is expected to help Volvo better compete with Germany’s Daimler, India’s Tata Motors and China’s Dongfeng Motor. For Isuzu, a maker of small and mid-sized diesel trucks, it would help achieve the goal of developing electric vehicles.
Sweden’s Volvo, which has already begun marketing battery-electric trucks, said the transaction will add to its operating income by about SEK 2 billion ($208 million) and increase its net cash by SEK 22 billion.
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Volvo is the world’s fifth-largest truckmaking group with brands including Volvo Trucks, Japan’s UD Trucks, France’s Renault Trucks and U.S.-based Mack Trucks.
“Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two groups,” Isuzu President Masanori Katayama said in a statement.
Vehicle makers are seeing a major shift in the global auto industry, where the rise of electric vehicles, self-driving cars and on-demand services are forcing them to invest heavily in new technologies and also tap rivals for partnerships and mergers.
Isuzu shares rose 3% on news of the partnership, which was reported by Japanese newspaper Yomiuri before the companies announced it in a joint statement.
Yetunde Adegoke
