Swedish premium automaker Volvo Cars has signed an agreement to buy out its parent company Geely Holding from their joint ventures in China in order to gain full control of its factories and sales operations in the world’s largest car market.
“The acquisition of an additional 50 percent of the shares in Daqing Volvo Car Manufacturing and Shanghai Volvo Car Research and Development (R&D) will further strengthen Volvo’s position in its largest market,” the company said.
According to the statement, the company will have full ownership of its manufacturing sites in Chengdu and Daqing, as well as its national sales organization in China and its R&D facility in Shanghai, under the terms of the purchase.
“With this agreement, Volvo Cars will become the first major non-Chinese automaker with full control over its Chinese operations,” Volvo Cars Chief Executive Mr. Hakan Samuelsson said. The financial details of the deal are not yet disclosed by the company.
Mr. Daniel Donghui Li, CEO at Geely Holding commented, “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.”
The statement said that the transactions, which are subject to regulatory approval, will be carried out in two steps. It will start next year when the joint venture requirement for auto manufacturing in China will be lifted, and seen formally completed in 2023. Furthermore, the statement emphasizes that these transactions will have no direct impact on the relevant companies’ employees or partners.
Chinese car manufacturer Geely Holding Group was already manufacturing its own cars before it acquired Volvo Cars from Ford Motor in 2010. Volvo is currently considering to launch its initial public offering (IPO) and stock market listing.