Isuzu Motors said, under the agreement it would enter the Indian market through the local assembly and sales collaboration contract for medium duty buses with Swaraj Mazda.
"The buses will be assembled by Swaraj and sold in India under the Isuzu brand through about 130 exclusive dealers of Swaraj," the company said.
Isuzu said the delivery of medium duty bus completely knocked down kits to Swaraj would start from 2007.
The company said it planned to sell about 100 units in 2007, which is expected to expand to 1,000 units in 2009. Bullish on the Indian market, Isuzu said the commercial vehicle market has been growing 10 per cent per year and approaching 350,000 vehicles.
"Isuzu will study the development of this business, with the possibility of future local production of light duty and medium duty trucks," it said. Informing about the deal to the Bombay Stock Exchange, Swaraj Mazda said it had signed the agreement in June 30.
Although Swaraj still retains "Mazda" in their corporate name, their capital relationship with Mazda was dissolved with the latter withdrawing from development and production of Mazda trucks and bus with Swaraj in August last year.
The Sumitomo Corporation is the largest shareholder in SM with 41 per cent stake, while Punjab Tractor holds 14 per cent. SM's share prices closed at Rs 236.70, up 5 per cent from Friday's closing at the BSE.