SHARE
COPY LINK

VOLVO

China’s Geely completes Volvo purchase

Geely Holdings formally completed its deal to buy Sweden's Volvo Cars from US auto giant Ford at a ceremony in London on Monday, the Chinese firm has confirmed.

China's Geely completes Volvo purchase

The Swedish brand will keep its headquarters and plants in Sweden and Belgium, and its management will retain its autonomy under a board headed by Geely Group chairman Li Shufu, Geely said in a statement.

“This is a historic day for Geely, which is extremely proud to have acquired Volvo Cars,” Li said in the statement.

“This famous Swedish premium brand will remain true to its core values of safety, quality, environmental care and modern Scandinavian design.”

Li earlier told China’s official Xinhua news agency that he hoped to see the struggling Swedish brand regain its former strong reputation.

“After the takeover, Geely remains Geely and Volvo is still Volvo. The relationship between the two companies is brotherhood and not a parent-and-child relationship,” Li was quoted as saying.

Geely, which first agreed to take over Volvo in March, has said it will

spend $2.7 billion on the deal — the original price tag of $1.8 billion, plus $900 million in working capital to improve the brand.

Ford owned Volvo for a decade.

Both the European Union’s competition watchdog and China’s commerce ministry gave their approval for the takeover last month.

Geely has said it plans to expand the presence of Volvo — known for its sturdy, family-friendly vehicles — in China, now the world’s largest car market.

It also plans to target the European and North American markets.

Geely has become one of China’s biggest private car makers since launching its auto manufacturing business in 1997. It has annual production capacity of 300,000 cars but has sold fewer than 200,000 abroad since 1997.

Dong Yang, executive vice president of the China Association of Automobile

Manufacturers, told Xinhua that maintaing Volvo’s brand and product quality would be a difficult task.

He added that raising Volvo’s market share in China and adapting the European brand to China would not be easy.

“All of these things should be realised step-by-step through hard work,” Dong was quoted as saying.

Shares in Hong Kong-listed Geely Automobile rose 5.86 percent to 3.07 Hong Kong dollars (40 US cents) on Monday.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

SHOW COMMENTS