Isuzu to buy Volvo’s UD Trucks in electric tech tieup

Technology

FILE PHOTO: The logo of Swedish automobile manufacturer Volvo is seen at Stierli Automobile AG company in St. Erhard, Switzerland April 11, 2019. REUTERS/Arnd Wiegmann

TOKYO (Reuters) – Japan’s Isuzu Motors will 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.

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.

Reporting by Chris Gallagher; Editing by Himani Sarkar and Arun Koyyur

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