Isuzu and the Volvo Group are forging a powerful new strategic truckmaking alliance – with UD Trucks to be sold to Isuzu as part of the deal.

The alliance – built on an existing relationship on medium-duty trucks in Japan – aims to "capture the opportunities in the ongoing transformation of the industry," says Volvo Group president and CEO Martin Lundstedt."We see great potential to extend our co-operation within technology, sales and service as well as other areas going forward, for the benefit of our customers and business partners."

The Financial Times reckons that the deal is a means for the Volvo Group to sell "its struggling Japanese business" – describing UD Trucks as "its longtime problem child."

The first step in the creation of the alliance is the establishment of a Volvo/ global technology partnership….

And the sale of UD Trucks for around $US2.3billion – building "a stronger, combined heavy-duty truck business for Isuzu Motors and UD Trucks in Japan and across international markets." 

The Isuzu/UD deal will accelerate growth for Isuzu "by leveraging greater volumes and complementary capabilities."

Isuzu president Masanori Katayama – referring to the current era of global automotive alliances – says: "Amid this once-in-a-century industry shift, there are many partnerships – but an alliance between commercial vehicle makers is the most efficient."

The truckmakers "intend to derive the full value from each other's different specialties across product and geographical strongholds. Our collaboration will actively contribute to service improvements and strengthened customer satisfaction as well as to prepare ourselves for the forthcoming logistics revolution."

While the deal involves complete ownership of UD Trucks being transferred to Isuzu ownership, Volvo Group Australia says that each party is also awarded "private importerships in selected markets, including Australia." 

It says that "nothing will change in the setup for the Australian market or for our customers in the Australian market. Hence we at Volvo Group Australia will continue to distribute the UD brand and support our UD Trucks Australia customers and dealer business partners." 

The deal is not expected to be completed until the end of this year.

In a separate development, Isuzu is reported to be joining forces with carmaker Honda to develop hydrogen-powered trucks – the latter seeing more potential for hydrogen fuel cell technology in commercial vehicles rather than passenger cars, according to Japanese media reports.