• AB Volvo expands stake in Nissan Diesel

    According to AB Volvo, increasing its stake in the Asian truck maker it strengthens its presence in the Asian market and to a lesser extent the North American market.
    Sept. 26, 2006
    2 min read

    AB Volvo has purchased an additional 6% of the shares in Nissan Diesel from Nissan Motor for 500 million SEK. It now owns a total of 19% of the shares in the Japanese truck manufacturer. According to AB Volvo, increasing its stake in the Asian truck maker it strengthens its presence in the Asian market and to a lesser extent the North American market.

    “We foresee favorable possibilities for coordination and economies of scale in the development of products, particularly in the medium-heavy range, with regard to engines and drivelines, as well as within purchasing, distribution and sales,” said Volvo CEO Leif Johansson.

    “We...looked at distribution in many countries in Asia and sales combinations in many countries in Asia and in some extent in North America,” Johansson said at a press conference held yesterday. “We foresee possibilities for coordination gains between Nissan Diesel and the Group’s other truck companies. But before we proceed further, we want to be the clearly largest owner in the company.”

    Johansson offered no further details on what this transaction means to AB Volvo’s and Nissan Diesel’s operations in Asia and North America, citing that they are in “preliminary stages” of planning.

    Johansson said that by becoming a majority stakeholder in Nissan Diesel, AB Volvo has stabilized its position to coordinate with Nissan Diesel. “If we’re committing Volvo’s resources to Nissan Diesel in our areas of expertise or if Nissan diesel commits their resources to Volvo in their areas of expertise…that excludes the possibility to take on other alliances,” he said. Becoming a majority stakeholder makes it “obvious to everyone both internally and externally that we have a very clear alliance with Nissan Diesel,” he added.

    AB Volvo said that the move marks an ongoing trend toward the consolidation of the truck and bus industry to take advantage of economies of scale in research and development, manufacturing and parts.

    “It does signify the process we’ve spoken about…in the past 25 years we’ve had consolidation in truck and bus industries,” Johansson said. “The drivers for that are the economies of scale related to research and development, manufacturing and [products sharing similar parts globally]. Over the next decade we see a continuing consolidation trend. But with regard to who will consolidate with who, and how [the industry] will look like in the future is much more difficult to forecast.”

    To comment on this article, write to Terrence Nguyen at [email protected]

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    Terrence Nguyen

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