Especially in China.
It's been just over a decade since Chinese automaker Geely purchased Volvo from Ford. Many were skeptical about the deal, believing Volvo might lose its autonomy and be absorbed into its new parent company. That couldn't be further from the truth. Volvo has thrived under Geely ownership mainly because Geely let Volvo be Volvo. It provided it the tools, funding, and general resources to succeed and the results speak for themselves.
China has also become a major strategic location both in manufacturing and sales. The Volvo XC40, for example, is built there for the local market instead of importing it from Belgium or Malaysia. And now Volvo is taking even greater control of its future.
A new agreement with Geely has been signed to acquire the latter's stake in the pair's Chinese joint ventures. The ultimate goal is for Volvo to take full ownership of its two production plants in Chengdu and Daqing, and its sales and R&D operations center in Shanghai. China also happens to be Volvo's largest market, which continues to grow at a rapid pace. In the first half of this year, sales increased by almost 45 percent compared to the same time in 2020, and by 40.1 percent compared to 2019.
"With this agreement, Volvo Cars will become the first major non-Chinese automaker with full control over its Chinese operations," said Volvo CEO Hakan Samuelsson.
Prior to this deal, Volvo already had a 50 percent share in its joint ventures with Geely. The new agreement and resulting transaction will see Volvo's net income and equity increase. Volvo's major purchase deal isn't happening overnight but rather in two stages, beginning in 2022 and concluding the following year. Regulatory approval is currently being sought and there shouldn't be any associated layoffs. Full financial details, however, will be disclosed.
Volvo remains on track to become an all-electric carmaker by 2030 and has been on something of a buying spree lately. Earlier this month it revealed plans to increase its shares of Polestar, also owned by Geely, to 49.5 percent.