HANGZHOU: Volvo Cars has signed an agreement with its parent Geely Holding to acquire Geely Holding’s stake in the companies’ 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 further strengthen Volvo Cars’ position in China, its largest market, and maximize exposure to one of the fastest growing regions globally.
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,” said Håkan Samuelsson, chief executive of Volvo Cars.
“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,” said Geely Holding chief executive officer, Daniel Donghui Li.
Volvo Cars has grown significantly faster than the average market in China in recent years and will continue to invest in the country to maintain the strong growth trend.
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.
Meanwhile, Volvo Cars' autonomous driving (AD) software development subsidiary Zenseact has received a strategic investment by ECARX, the privately-owned Chinese provider of cutting-edge connected car technology.
ECARX will take a 15% shareholding in Zenseact and make a strategic investment in the company’s continued development of leading and safe AD and safety technologies.
Building on Zenseact’s global software platform, the companies also plan to collaborate on AD for the Chinese market.
The strategic investment and planned collaboration with ECARX strengthen Zenseact’s presence in China, the world’s largest automotive market, allowing it to accelerate technology deployment in China across the Geely group of brands and beyond.