Currently reading: Volvo set to merge with parent firm Geely
Full merger of Swedish firm with Geely's car firms would "create competitive advantages"; bosses promise distinct identities will be retained
James Attwood, digital editor
News
2 mins read
10 February 2020

Volvo and parent company Geely will investigate merging into a single company in order to become more competitive in the global car market.

The Swedish car maker has been owned by Chinese giant Geely Holding since 2010 but remains a separate firm from Geely Automobile Holdings, which owns brands including Lotus, Lynk&Co, Proton and LEVC. Volvo's new spin-off brand Polestar is jointly owned by the two.

The proposed deal would merge Volvo and Geely Autmobile Holdings. The firms say the deal would "accelerate financial and technical synergies", with the "scale, knowledge and resources to be a leader in the ongoing transformation of the automotive industry". It added that any deal would "preserve the distinct identity" of Volvo, Geely, Lynk&Co and Polestar.

The two companies have established a joint working group headed by Volvo boss Hakan Samuelsson that will develop a proposal to send to each board. A Volvo spokesperson said the aim was to finalise the creation of the new group by the end of the year. 

Geely chairman Li Shufu said the deal would “strengthen the synergies within the group while maintaining the competitive advantage and the integrity of each individual brand”.

Volvo and Geely already benefit from considerable shared technology, including the CMA and SPA platforms, and are in the process of merging their combustion engine divisions into a single firm. A spokesperson added the deal would allow the firm to "invest in new technologies such as electrification, connectivity and self driving technology."

Since Geely bought then-struggling Volvo from Ford, the brand has been revitalised and achieved record sales, largely thanks to the expansion of its SUV range. In recent years, Volvo has made several bold moves under boss Håkan Samuelsson, including setting the goal of becoming a maker of electric cars only within 20 years.

By merging, both Volvo and Geely could benefit from greater joint technical development and shared production facilities, which could be vital for them to remain competitive against giants such as the Volkswagen Group and the newly merged PSA Group and Fiat Chrysler Automobiles. It could also give Volvo access to extra production capacity in Geely's China factories, while aiding Geely’s attempts to expand its brands into Europe. 

The new company would initially be listed on the Hong Kong stock market, with the intention to subsequently list it in Sweden. It's not known how the leadership of a combined company would be formed.

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Comments
7

10 February 2020

already enjoy financial and technical synergies. Is this just Geely's way of saying they want even tighter control?

10 February 2020
Hughbl wrote:

already enjoy financial and technical synergies. Is this just Geely's way of saying they want even tighter control?

I was thinking similar, surely they already have everything they need from Volvo as they own it, what benefit really comes from a merger over the current ownership? I don't really see what they are getting at regarding how it benefits them.

10 February 2020

Surely this means that all Volvo's bound for the UK market will not be imported from mainland Europe & Sweden because of tariffs, but in the future from China! Just like when the UK buys more BMW SUV'S they are all imported from the USA. So one result of Brexit is the re-allignment of the supply change & less cars imported from the EU:

 

K_A

10 February 2020
With regards to every BMW SUV/CUV built in America, I know my X2 was built in Germany and U.K.-bound X3 models are built and imported from South Africa, according to the salesman I was dealing with.

Before I ordered my X2, I queried with my local Volvo retailer who said last year that U.K.-bound XC60s will be imported from China.

10 February 2020
jagdavey wrote:

So one result of Brexit is the re-allignment of the supply change & less cars imported from the EU:

Eh? What on earth has Brexit got to do with this story?

Whether we're in the EU or out of it, we import cars from the factories where they're built.

11 February 2020

I will never contribute to state backed Chinese companies with a purchase. No doubt Volvo is a good car, (but I never rated a company car we had some time ago), but that is besides the point. China wants to rule the world and I will not help them get there, not with the lack of human rights and bullying of neighbours. Reminds me of a European country in the 1930s.

11 February 2020
[quote=john386]

I will never contribute to state backed Chinese companies with a purchase. No doubt Volvo is a good car, (but I never rated a company car we had some time ago), but that is besides the point. China wants to rule the world and I will not help them get there, not with the lack of human rights and bullying of neighbours. Reminds me of a European country in the 1930s.

[/quote

Dont worry, coronavirus is going to be a much more potent export, whether you like it or not.

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