Volvo takes control of Chinese production capacity
Volvo is going against the grain by taking back control of its Chinese production capacity after parent company Geely Holding helped the Swedish manufacturer through a difficult period.
Volvo will acquire an additional 50% of the shares of the two Chinese sites (Daqing Volvo Car Manufacturing and Shanghai Volvo Car Research) by 2023.
Chinese company Geely has invested a lot of money in Volvo over the past ten years but has given the Swedish manufacturer the necessary independence so that the European brand could continue to develop its own products and preserve Volvo’s brand identity.
The cooperation was interesting for both partners because Volvo received the necessary resources for R&D and gained access to Chinese battery technology. Geely, on the other hand, could count on platform and safety technologies from Volvo.
“With this agreement, Volvo Cars will become the first major non-Chinese automaker with full control over its Chinese operations,” said Håkan Samuelsson, CEO of Volvo Cars.
“Geely Holding Group and Volvo Cars are continuously evaluating the best way to collaborate and structure operations within the wider Group. This will create a clearer ownership structure within both Volvo Cars and Geely Holding,” said Geely Holding’s CEO, Daniel Donghui Li.
Volvo has done very well in recent years in China, recording a 7,5% increase in 2020 sales compared to 2019, despite the pandemic. In the first half of 2021, sales increased 44,9% compared to the same period in 2020 and 40,1% compared with the same period in 2019.
With the transactions, Volvo will be 100% responsible for the Chengdu and Daqing production sites. In this way, Volvo aims to gain a firm footing in the Chinese car market, which remains one of the main growth markets worldwide.
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.