News from Japan’s financial news agency Nikkei overnight has revealed that Volvo brand, UD Trucks will stop manufacturing medium duty trucks in Japan, and instead turn to Japanese rival Isuzu to source mid size models as the company channels those resources into the development and production of larger trucks.

UD’s statement to the Japanese press states that it has entered an original equipment manufacturing agreement with Isuzu to sell rebadged Isuzu trucks beginning in 2017.

The vehicles will be based on what Isuzu call the F series in Australia will be supplied from Isuzu’s Fujisawa plant.

UD’s venerable Ageo plant will cease production of midsize trucks next year with the company also stopping the manufacture of midsize trucks for export markets. The Ageo plant will continue to manufacturing large trucks.

The arrangement is not a new one for UD nor Isuzu with the pair previously having a manufacturing agreement covering small trucks, which began in 1995 but was terminated in 2014 as UD switched the procurement source to Fuso.

The move is believed to be tied to the tightening of truck emission rules by the Japanese transport ministry, with new trucks released after the middle of this year having to meet new standards.

UD, which holds only about six per cent of the Japanese domestic midsize truck market, has decided to source the vehicles from another manufacturer rather going through the added expense of developing a new model by itself.

The move will according to UD will allow it to focus on raising its domestic share in large trucks from tis current 17 per cent to around 25 per cent as soon as possible.

UD only sold just a little more than 2,000 midsize trucks in Japan in 2015 which was less than a quarter of the company’s sales for large trucks.

UD says that it aims to bolster its efforts to cultivate emerging markets by manufacturing trucks aimed at those markets targeting them in Thailand.

Japan’s combined sales of midsize and large trucks rose 1.4 per cent to 89,321 units in 2015, which was the sixth consecutive year of growth for the industry.

Demand has been robust from the construction and distribution industries, which have benefited from building projects related to the 2020 Summer Olympics in Tokyo and the growing popularity of online shopping, respectively.

UD, which traces its roots to Nissan Diesel Motor but which has been under the control of the Volvo Group since 2010, has struggled to rise from its bottom market position, as three truck makers ahead of it have more extensive service networks.