Volvo Group has signed a non-binding memorandum of understanding (MoU) with Isuzu Motors with the aim of forming a strategic alliance in the area of commercial vehicles, the Swedish and Japanese brands said in a joint statement.

The first step from the forming of this alliance is to establish a global technology partnership that will employ both current and new technologies from both parties as well as to grow the collective volume base in order to support future technology investments, the statement said, adding that all technology cooperation ventures between Volvo Group and Isuzu Motors will be managed via individual contracts.

This will entail transferring ownership of the complete UD Trucks business globally from the Volvo Group to Isuzu Motors by leveraging volumes and complementary capabilities between the two groups of companies, each of which complement each other greatly from a geographical and product line perspective, the joint statement continued.

“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,” said president and CEO of Volvo Group Martin Lundstedt.

“Isuzu Motors and the Volvo Group strongly believe in the business opportunities and synergy potential between the two Groups. We intend to derive the full value from each other’s different specialties across product and geographical strongholds,” said president and representative director of Isuzu Motors Limited Masanori Katayama.

The next steps are to finalise to scope of businesses to be transferred, due diligence by Isuzu Motors and negotiations of binding agreements. Signing of binding agreements is expected to take place in the middle of next year, and closing of transaction is expected to be by end-2020.