Volvo Cars has signed an agreement with the parent company, Geely Holding, to acquire a stake in joint ventures in China. The purpose of this operation is for the Swedish brand to gain full control over car factories and sales.
The acquisition of an additional 50% stake in Daqing Volvo Car Manufacturing Co., Ltd and Shanghai Volvo Car Research and Development Co., Ltd will further strengthen Volvo Cars’ position in China, the world’s largest automotive market, and increase access to a from the fastest growing regions.
Although the two joint ventures are now fully included in the Volvo Car Group’s financial statements, Volvo Cars’ share of their net income and equity will increase after the transaction.
“With this agreement, Volvo Cars will become the first major non-Chinese carmaker to fully control its operations in China,” said Hakan Samuelson, CEO of Volvo Cars.
Volvo Cars has performed well in the Chinese market in recent years and will continue to invest in the country to maintain a steady growth trend. As a result of the deal, Volvo Cars will have full ownership of the production plants in Chengdu and Daqing, the national sales company in China and the R&D center in Shanghai.
The deals will be completed in two phases, starting in 2022, when the requirement to set up a joint venture for production on cars in China will be canceled and is expected to be officially completed in 2023. Now the deal is awaiting approval from regulators. Financial details were not disclosed.
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