The deed is done. Isuzu Motors has completed the transaction whereby Isuzu Motors has acquired UD Trucks from the Volvo Group as part of the completion of the strategic alliance between the Volvo Group and Isuzu Motors. In simple terms, Isuzu Trucks is now the legit owner of UD Trucks lock, stock and barrel – and there now exists a strategic alliance between Volvo and the merged Isuzu/UD Truck group.
The transaction put around R32,4-billion into Volvo Group’s coffers with a further amount up to R2,1-billion to be paid to Volvo Group as an earn-out, subject to the performance of UD Trucks during the years 2021-2023.
The intention of Volvo to sell UD Trucks to Isuzu Motors came as a surprise to the market with FleetWatch first hearing of it back in November 2019 via a short statement from Volvo that a Memorandum of Understanding had been signed for the transfer of ownership of the complete UD Trucks business globally from Volvo to Isuzu. This would result in the merger of the heavy-duty truck business of Isuzu Motors and UD Trucks – not only in Japan but across global markets, including South Africa.
We tried, at the time, to get more information from the local guys but understandably, they were as much in the dark then as we were. The negotiations were taking place at head-office levels in Sweden and Japan and it would be some time until any details would be filtered down to regions like South Africa.
It was stated at the time that all potential transactions would be subject to regulatory and other approvals. Well, that has now all been completed and the bottom line is that Isuzu Trucks now owns UD Trucks and a new strategic alliance now exists between Isuzu Motors and the Volvo Group.
According to statement issued by Volvo, alliance work is now entering the next phase to derive potential synergies in areas that will encompass but are 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.
- 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.
- Exploring further opportunities for even broader and deeper collaboration within the commercial vehicle businesses across geographical areas and product lines for future urban logistics solutions.
- Exploring cooperation in the areas of purchasing and logistics, leveraging common technology, as well as the geographical footprint complementarity and volume expansion.
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 is agreed to have a minimum duration of 20 years and is intended to address possibilities and challenges of the logistics industry of the future, maximizing value and benefits for customers as well as for society.
In a separate statement released by UD Trucks, the company says that together with Isuzu Motors, opportunities for UD Trucks include leveraging each other’s strengths and economies of scale, especially in the area of heavy-duty trucks in Japan and across international markets. It also intends to create a strong base to continue to invest in technical development and innovations for world-class products and services.
Now that the deal is done, FleetWatch urges the local UD Trucks and Isuzu management to get together and give us some idea of how this is going to work out in our local market. It has, understandably, been impossible for any firm statements of direction or intent to be issued during the stages of parent company negotiations but now that it is a ‘done deal’, we see it as a matter of urgency that the market be brought into the picture in terms of the future plans and structures. For a start: Who does FleetWatch talk to on the local scene for comment – Isuzu Trucks or UD Trucks? Who’s the boss?