Volvo buys into Chinese truck maker
"With this deal we have also secured a very strong foothold in the Chinese market," Olof Persson, Volvo Group chief executive, told Swedish Radio news from Beijing.
Mr Persson noted that China was the world's largest truck market, equivalent to the European and North American markets combined.
The transaction with Dongfeng was worth about 6 billion kronor ($891 million), the Volvo Group said.
It was estimated the deal would take 12 months to complete, subject to approval from anti-trust agencies and Chinese authorities.
The move is part of Volvo's plans to expand in Asia. The groups plan to co-operate on engines and power-train components, and product platforms and purchasing, Volvo said.
The subsidiary of Dongfeng Motor Group, Dongfeng Commercial Vehicles, is to include the major part of Dongfeng's medium and heavy-duty commercial vehicles business.
In 2011, Dongfeng sold 186,000 trucks, of which about 142,000 trucks were made by the part of the company to be included in the subsidiary DFCV.
The Volvo Group sold 180,000 heavy-duty trucks in 2011, making it the third-largest global maker behind Dongfeng, and top-placed Daimler of Germany. Dongfeng and Volvo are each to appoint four members to the DFCV management team. Dongfeng is to nominate the managing director, while Volvo is to name the chief financial officer.
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Volvo plans to buy a 45 per cent stake in a new Dongfeng subsidiary — Dongfeng Commercial Vehicles (DFCV) — which will include the major part of Dongfeng's medium- and heavy-duty commercial vehicles business.
The transaction was reported to be worth about 6 billion Swedish kronor, roughly equivalent to US$891 million according to the article.
The combined operations would make the partnership the world's largest producer of heavy‑duty trucks, with Volvo aiming to secure a very strong foothold in the Chinese market — the world's largest truck market.
The deal was estimated to take about 12 months to complete and is subject to approval from anti‑trust agencies and Chinese authorities before it can be finalised.
Volvo said the groups plan to co‑operate on engines and power‑train components, product platforms and purchasing as part of their expansion in Asia.
The DFCV subsidiary is set to include the major part of Dongfeng's medium‑ and heavy‑duty commercial vehicles business — roughly the portion that produced about 142,000 of Dongfeng’s 186,000 truck sales in 2011.
In 2011 Dongfeng sold about 186,000 trucks (around 142,000 from the unit to be included in DFCV), while the Volvo Group sold about 180,000 heavy‑duty trucks that year, placing Volvo third globally behind Dongfeng and Daimler.
Dongfeng and Volvo are each to appoint four members to the DFCV management team; Dongfeng will nominate the managing director and Volvo will name the chief financial officer.
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