Volvo to take full ownership of its Chinese manufacturing and sales operations
Volvo Cars has signed an agreement with its parent Geely Holding to acquire Geely's stake in the parties joint ventures in China, with the aim of taking full ownership of its car manufacturing plants and sales operations in the country.
The acquisition of an additional 50% of the shares in Daqing Volvo Car Manufacturing Co., Ltd and Shanghai Volvo Car Research and Development Co., Ltd, will strengthen Volvo Cars’ position in China, its largest market. Although the two joint venture companies are already fully included in Volvo Car Group’s financial statements, Volvo Cars’ share of their net income and equity will increase following the transaction. “With this agreement, Volvo Cars will become the first major non-Chinese automaker with full control over its Chinese operations,” says Håkan Samuelsson, chief executive of Volvo Cars in a press release. “Geely Holding Group and Volvo Cars are continuously evaluating the best way to collaborate and structure operations within the wider Group. These two transactions will create a clearer ownership structure within both Volvo Cars and Geely Holding,” adds Geely Holding chief executive officer, Daniel Donghui Li. Following the transactions, Volvo Cars will have full ownership of its manufacturing plants in Chengdu and Daqing, its national sales company in China and its R&D facility in Shanghai. The transactions will be completed in two steps, starting in 2022 when the joint venture requirement for auto manufacturing in China will be lifted, and expected to be formally completed in 2023. According to the press release, employees and partners within the relevant companies will not be directly affected by the transactions. Financial details will not be disclosed.