FILE PHOTO: The logo of Swedish car manufacturer Volvo, is to be seen on a Stierli Automobile AG is a company in California. Erhard, Switzerland, April 11, 2019. REUTERS/Arnd Wiegmann
TOKYO (Reuters) – the japanese Isuzu Motors, for the purchase of Volvo AB’s UD Trucks business, which has an enterprise value of $2.3 billion, and its relationship with the Swedish company to save on costs, and the development of electric and self-driving technologies.
The tie-up is expected to help Volvo to better compete with germany’s Daimler, India’s Tata Motors and chinese Dongfeng Motor. For Isuzu, a maker of small-and medium-sized diesel truck, it would be helpful to the achievement of the objective of the development of electric vehicles.
The Swedish company Volvo, which has already begun, with the sale of battery-electric trucks, said the transaction will add to operating income of approximately SEK 2 billion ($208 million) and an increase in net cash and cash equivalents by SEK 22 billion.
Volvo is the world’s fifth-largest truckmaking group, with brands including Volvo Trucks, Japan, UD Trucks, France Renault Trucks, as well as the U.S.-based Mack Trucks.
“Isuzu Motors and Volvo Group, with a strong belief in the capabilities and potential synergies 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 advent of electric cars, self-driving cars, as well as on-demand services, forcing them to invest in new technologies, and even tap competitors to co-operation and mergers.
Isuzu shares were up 3% on the news of the collaboration, which has been reported by the Japanese newspaper Yomiuri for the firms announced in a joint statement.
Reporting by Chris Gallagher; Editing by Himani sarkar and Arun Koyyur