Volvo and Geely ready for fusion
The Swedish car manufacturer Volvo was already owned by the Chinese carmaker Geely for 99% but was acting independently. Now they’re thinking of fusing into one big company to better withstand the uncertain future and its many challenges.
By working together, Volvo and Geely estimate themselves to be well-armed to face the changes. “This combination will have enough scale, knowledge, and means to become a leader in the transformation of the entire car industry.
The fusion makes Volvo taking profit from the strong stock position of Geely (Hong Kong stock exchange). Two years ago, Volvo planned to go IOP by itself, but investors at that time estimated Volvo at 12 to 18 billion dollars, while the management was thinking of more than 30 billion.
Geely bought Volvo in 2010 from the American car manufacturer Ford. Unlike the Americans, Geely CEO, Li Shufu, was clever enough to leave Volvo on its own, which resulted in an impressive growth of the Swedish manufacturer, mainly based on the success of its new SUVs.
During these last 10 years, Volvo was managed on its own, in Sweden, by a separate board of management headed by CEO Hakan Samuelsson. The fusion is not meant to endanger this: Samuelsson stays at the helm, only the cooperation and the synergies will dramatically increase.
Last year already, Volvo and Geely announced the joint development of internal combustion engines (ICE). The boards of both companies will draw a plan for the fusion. They hope to realize it by the end of the year.
The combined firm will also include Volvo’s new (electric) premium brand, Polestar, Geely’s offshoot, Lynk & Co, and a new totally electric brand named Geometry. Apart from that, Geely also owns Lotus, has 50% of Malaysian Proton, and has a ±10% stake in Daimler.
At the moment, Geely has valued 16 billion dollars on the stock exchange. Together with Volvo, it will surely end above 30 billion. That’s the equivalent of Ford, America’s number two. The joint production will total some 2 million cars per year in the beginning, as much as BMW now.
Car company fusions are in again. Lately, PSA and FCA have decided to go together, other manufacturers are thinking of it to face the huge investments the entire sector is confronted with (electrification, autonomous cars, alternative mobility needs…). More cooperation is a necessity.
Cleaning the air
Geely also just announced that it will invest 48 million euros in cars that clean the air and filter it from viruses. The car manufacturer is studying different systems of air treatment and anti-bacterial materials.
According to Geely, people’s security goes further than avoiding accidents and injuries. For many people, their car is their second home, so we have to make it as healthy as possible, says Geely. For a better quality of life for everybody.