News - Volvo
Volvo buys factories and sales operations off Geely
Volvo becomes first non-Chinese brand to own assets in China after buying out Geely
23 Jul 2021
By NEIL DOWLING
VOLVO Cars has become the first non-Chinese car-maker to control its operations in China after buying car factories and sales operations from its parent Geely Holding.
The move maximises Volvo’s exposure to its largest market and increases its revenue. In the first six months of this year, Chinese sales accounted for 25 per cent (or 95,252 units) of Volvo’s global sales of 380,757 units.
Volvo sales have grown significantly faster than the average car market in China in recent years, with the investment seen as an important in maintaining the strong growth trend.
Geely, which bought Volvo in 2010, maintains its ownership of Volvo along with majority shareholdings in other car brands including Polestar, Lotus, Proton, Lynk & Co, Smart and taxi-maker London Electric Vehicle Company.
Following the transactions, Volvo Cars will have full ownership of its Daqing Volvo Car Manufacturing Company and Shanghai Volvo Car Research and Development Company joint ventures, including the manufacturing plants in Chengdu and Daqing. It also includes the national sales company.
Volvo’s takeover of the 50 per cent shareholding previously held by Geely in the factories and research centre will be effective from 2022 and is expected to be completed by 2023.
The move is in response to the Chinese government’s ruling that allows foreign car-makers to own factories in China – previously they had to be joint ventures – from next year and has significant business and tax implications for both Volvo and Geely, which will continue to work together on car projects.
Volvo Cars chief executive Hakan Samuelsson said: “Geely Holding Group and Volvo Cars are continuously evaluating the best way to collaborate and structure operations within the wider group.”
Geely bought 49.9 per cent of Malaysia’s Proton Holdings in 2017 and invested about $A400 million in a factory upgrade to produce the Geely-based SUVs, the X70 and X50.
The Proton X50 is based on the Geely Bin Yue (Geely Cool Ray in global markets) which is built on Geely’s BMA (B-segment Modular Architecture) platform that was jointly developed with Volvo at the shared R&D centre in Europe.
Geely also bought 51 per cent of Lotus 2017, and provides Chinese-made technology under the Zeekr name including infotainment systems and vehicle electronics to Lotus products, including the Emira.
Zeekr is termed as an “electric mobility technology and solutions” brand that also designs and makes EVs and batteries, ideally to be shared with the Geely-Volvo group.
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