Volvo Cars, the renowned automotive company, has signed an agreement with its parent company, Geely Holding, to acquire Geely Holding’s stake in their joint ventures in China. This strategic move aims to grant Volvo Cars full ownership of its car manufacturing plants and sales operations in the country. With this development, Volvo Cars will become the first major non-Chinese automaker to have complete control over its Chinese operations.

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Strengthening Volvo Cars’ Position in China

The acquisition involves obtaining an additional 50% of the shares in Daqing Volvo Car Manufacturing Co., Ltd and Shanghai Volvo Car Research and Development Co., Ltd. This move will not only strengthen Volvo Cars’ presence in China, its largest market, but also maximize its exposure to one of the fastest-growing regions globally. As Volvo Cars has experienced significant growth in the Chinese market in recent years, this acquisition will further enhance its position and allow the company to continue investing to maintain its strong growth trend.

The Path to Full Ownership

Currently, the two joint venture companies are already fully included in Volvo Car Group’s financial statements. However, following the transaction, Volvo Cars’ share of their net income and equity will increase. The transactions will be completed in two steps. The first step will begin in 2022 when the joint venture requirement for auto manufacturing in China is lifted. The formal completion of the transactions is expected in 2023, pending regulatory approvals.

A Clearer Ownership Structure

Volvo Cars and Geely Holding are continuously exploring the best ways to collaborate and structure operations within the wider group. These two transactions are aimed at creating a clearer ownership structure within both companies. By taking full ownership of its manufacturing plants in Chengdu and Daqing, its national sales company in China, and its R&D facility in Shanghai, Volvo Cars is set to solidify its position in the Chinese market.

FAQs

Question 1: Who currently owns Volvo Cars?

Volvo Cars has been under the ownership of Zhejiang Geely Holding since 2010.

Question 2: Will employees and partners be affected by these transactions?

Employees and partners within the relevant companies will not be directly affected by these transactions.

Question 3: What is Volvo Cars’ outlook for the Chinese market?

Volvo Cars has experienced strong growth in the Chinese market in recent years. In 2020, it sold 166,617 cars in China, marking its eighth consecutive sales record in the market. Sales in the first half of 2021 increased by 44.9% compared to the same period in 2020.

Conclusion

With the agreement to acquire Geely Holding’s stake in their joint ventures, Volvo Cars is set to become the first major non-Chinese automaker to have full control over its Chinese operations. This move will strengthen Volvo Cars’ position in China, its largest market, and allow the company to continue investing in the country’s automotive industry. As Volvo Cars looks towards the future, its commitment to providing customers with the freedom to move in a personal, sustainable, and safe way remains unwavering.