Volvo buys Nissan Diesel

Volvo has made an offer to buy Japanese truck manufacturer Nissan Diesel for £546m. The Swedish firm already owns 19% of ND, but sees potential production and marketing synergies and access to Nissan Diesel's 'heavy hybrid' technology.

From the Volvo Group press release:

“Nissan Diesel’s products and know-how represent a valuable complement to the Group’s truck business,” says [Volvo CEO] Leif Johansson. “Nissan Diesel holds a solid position in Japan and the rest of Asia where the Volvo Group foresees substantial growth potential. A merger offers both parties even greater possibilities to learn and benefit from each other’s know-how and resources.”“During our joint synergy study, great trust grew between the companies and I believe that the merger is the best alternative for Nissan Diesel’s future,” says Iwao Nakamura, President of Nissan Diesel.

Since Volvo’s first purchase of shares in Nissan Diesel, Volvo’s Deputy CEO Jorma Halonen was appointed Vice Chairman in Nissan Diesel’s Board. Jorma Halonen sees major mutual advantages with an even closer cooperation.

“Nissan Diesel can benefit from the Volvo Group’s resources and know-how, but Volvo can also benefit greatly from Nissan Diesel’s experience of medium-heavy trucks and its expertise in, for example, hybrid technology,” he says.

The study of co-ordination possibilities carried out jointly by Volvo and Nissan Diesel identified synergies over five years of about €200m (£135m) annually. The major portion of the integration gains is as a result of increased purchasing volumes, but positive effects also arise within product development, engines and drivelines. Other gains arise in that the companies have access to each other’s dealer and service networks, primarily in Asia but also in other parts of the world.

Volvo Gets the Rest of Nissan Diesel

Volvo has swooped on the remaining bit of Nissan Diesel in a $1.1 billion/ €834 / £560 million deal. The Swedish OEM already owns just over 19 per cent of Japan’s smallest truck maker.This is a good deal for Volvo. It offers the Swedes access to NDM’s hybrid research technology - of key interest to Gothenburg at present - and provides a retail brand within NAFTA – UD Trucks . It consolidates the nascent relationship with DongFeng, and therefore opens out much of the Asian truck market for Volvo - one of the company's - apparently - key target regions. Just for good measure, we reckon that the Swedes have done the deal at a car boot sale price.But there are a couple of problems. This seems to mark the end of the Volvo – CNHTC JV in China. We’ve alluded to this before – they are far from being the best of friends – and so Volvo is going to have to tip up some serious coin for the divorce. Moreover, following the apparent end of negotiations with Ashok Leyland, Volvo's Indian plans must be regarded as being on hold.It also leads us – once again – to question Renault’s place in all of this. Let us hypothesise that Carlos Ghosn decides to take his Renault-Nissan deal into the US, and makes a bid for a bit of Ford. Or Chrysler. Or GM, Studebaker or any other bit of the US biz that isn't physically nailed to the floor. At this point, Renault SA’s 20 per cent of AB Volvo looks somewhat surplus to requirements. He sells, someone buys. Just for larks, that someone could, of course, be DongFeng. But, even if the Renault SA stake ends up on eBay, we can see no reason for the Renault truck brand to continue. It is a dog. If Renault SA does sell, it’s a rabid dog. Mack, conversely – and represented by a Bulldog – has some mileage in the US.If we had anything to do with Renault Trucks, we’d now be worried. Were we a Volvo shareholder, we’d be working out how much the CNHTC divorce was going to cost. And, if we were DongFeng, we’d be calling the bank. Things just got interesting again.