Volvo Buys Stake in Nissan Diesel

Volvo purchased 40 million shares, or roughly 13%, of the Japanese truck manufacturer Nissan Diesel. They have left open the option to purchase the remaining 6% of the shares within four years. This is an interesting transaction, but one Volvo views as strengthening their Asian presence for three reasons.

One is that as a major shareholder of Nissan Diesel, Volvo will have access to the Nissan Diesel dealer network and service centers for their existing trucks in the region. This will help reduce overhead cost of building Volvo service centers as the two can coexist now. The second reason is that Volvo can begin to work more with Nissan to help develop and distribute such items and engines and transmissions that will reduce cost for shipping and assembling Volvo trucks in the region. The third reason, and perhaps the most important for future operations, is that Nissan Motors, who owns 19% of Nissan Diesel, owns 50% of Dongfeng Motor Co. in China which is currently the largest truck builder in China. This opens the door for Volvo to capitalize on the Chinese market and introduce their Trucks, Heavy Equipment, and Transportation vehicles (read: buses) into a budding economy that is in transition and construction is moving at a very rapid pace. This seems like a smart more for Volvo to make and I look forward to seeing the results of this endeavor.