Volvo Financial Services (VFS) and Eicher Motors intend to form a 50/50 joint venture to provide financing, leasing and other financial services for customers of Volvo and Eicher-branded commercial vehicles within the Indian market. Pending regulatory approval, the JV will be created by VFS India issuing new shares to Eicher in exchange for an equity investment of up to Rs 750 crores or approximately 730 MSEK. The exact investment will be determined at the time of closing per the transaction documents. The impact on earnings at the closing of the transaction will not be significant and will not have any cash flow effect on the Volvo Group.
“VFS has developed a strong portfolio in India by leveraging our global presence and working together hand-in-hand with our Volvo customers and dealers,” Marcio Pedroso, president of VFS, said. “We believe now is the time to sharpen our focus on the Eicher brand as well, with our intended partnership serving as a springboard for bringing innovative financial services and solutions to both current and new customers and dealers, positioning us well to create long-term value in the growing Indian market.”
The proposed JV will combine VFS’ knowledge and customer focus with Eicher’s commercial vehicles and dealer network to capture new business in a more aligned and efficient manner. The JV will also deepen integration to move closer to customers and accelerate decision-making, helping customers more easily access financing solutions that meet the needs of their business.
Initially, the proposed JV will focus on financing Volvo and Eicher commercial products, with the prospect of financing Royal Enfield customers and dealers in India in the future.
VFS and Eicher intend to operate the proposed JV as an independent entity and will incorporate existing people, resources and assets from both companies into the new organization. Following the integration, no changes are anticipated to the current office locations of VFS India, which include Gurgaon, Bangalore, Kolkata, Mumbai, Hyderabad and Delhi.
The closing of the deal is expected during H1/27, contingent upon approvals from respective authorities.
