It's the sign of the times.
The global auto industry is changing rapidly due to a number of rising new technologies. Developing those technologies is anything but cheap and it makes better business sense to seek partnerships and, potentially, mergers. The Ford-Volkswagen partnership and the pending FCA-PSA merger are two main examples.
But today, another merger appears to be happening. Volvo Cars and its parent company, Geely Automobile Holdings, are considering a plan to combine their businesses "to create a strong global group." Doing so would "accelerate financial and technological synergies" between the two. Nothing is officially set in stone just yet but given that this information comes directly from Volvo, the chances of a deal happening very soon is likely.
"A combination of the two companies would result in a strong global group. We look forward to working with Hakan Samuelsson, president and CEO of Volvo Cars, to further investigate this opportunity with the goal to strengthen the synergies within the Group while maintaining the competitive advantage and the integrity of each individual brand," said Li Shufu, Chairman of Geely Holding Group.
The two automakers are already working on joint projects. For example, the Volvo XC40 rides on the Compact Modular Architecture (CMA), a platform jointly developed by Volvo and Geely. This highly flexible platform can also be used for all-electric vehicles, such as the Volvo XC40 Recharge and Polestar 2.
The relationship between Volvo and Geely has produced excellent results. If you recall, Geely bought Volvo from Ford back in 2010 and has since successfully managed to revive the Swedish luxury brand. Many industry analysts were surprised Geely wanted Volvo in the first place, but the results speak for themselves. If the Geely-Volvo merger proceeds, the transaction would be carried out in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong.
No time frame was provided as to when this could happen, but we wouldn't be surprised to hear an official announcement as soon as next month at Geneva.