Isuzu ties up with Volvo to develop electric vehicles.

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 truck-making 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,” said Isuzu’s President, Masanori Katayama.

Isuzu shares rose 3 per cent on news of the partnership, which was reported by Japanese newspaper Yomiuri before the companies announced it in a joint statement.

HBL