Volvo is planning to expand presence in other segments and express cargo movement is one such area where it would like to have a strong presence, the company said.
The joint venture agreed by the two companies will operate as an independent and autonomous entity, with Daimler Truck AG and the Volvo Group continuing to be competitors in all other areas of business.
Since the Japanese trucking market is very competitive and not very profitable, this deal will free-up cash for Volvo to compete in German, Chinese and Indian markets.
Apart from the Eicher trucks, VECV also manufactures Volvo trucks in India, Eicher buses and Euro-VI engines for Volvo that are exported.
Volvo has decided for now to only deploy driverless trucks in pilots for customers, aiming to perform specific jobs on a limited, repetitive and controlled route, often on enclosed customer sites.
Fellow muscle man, Jean-Claude Van Damme previously starred in a famous 2013 advertisement for Volvo trucks, in which he pulls off an 'epic split'.
Before the sanctions were reimposed, Volvo had expressed an ambition for Iran to become its main export hub for the Gulf region and North Africa markets.
The cabless truck - which Volvo calls Vera and can pull loads weighing up to 32 tonnes - can be attached to any standard trailer.
Geely's ownership of a stake in Volvo trucks, a direct competitor to Daimler's trucks business, makes cooperation particularly difficult in the area of commercial vehicles.
Under current German law, the government can only become active if a stake threshold of 25 percent is exceeded.