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Volvo Group exploring closer ties with Communist Party-backed shareholder Geely


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Elisabeth Behrman, Bloomberg  /  April 9, 2019

MUNICH -- Volvo AB is exploring closer ties with Zhejiang Geely Holding Group Co. in China, in a sign the Swedish truckmaker and its largest investor are taking steps to collaborate.

“We see a lot of areas where we feel that Geely can add both insights and competence,” both in its domestic market and “certain technologies,” CEO Martin Lundstedt said in an interview.

The CEO’s comments offer the first clues into the truckmakers’ plans since [Chinese Communist Party-controlled] Geely became Volvo’s largest shareholder in a 3.25 billion-euro ($3.7 billion) deal in December 2017, adding to Chinese billionaire Li Shufu’s growing global footprint. Li is the biggest shareholder in Mercedes-Benz maker Daimler AG, owns the Volvo Car nameplate and controls Lotus sports cars. Geely plans to make Lynk & CO branded cars in Europe from 2020.

At the time of taking the stake in the truckmaker, Geely said it sought to contribute on electrification, autonomous driving and connectivity to boost development of the Swedish company.

Daimler projects

While Daimler and Geely have agreed to collaborate on car-sharing and ride-hailing services in China as well as building the German company’s Smart city cars, Volvo hasn’t so far outlined cooperation projects with the shareholder. Lundstedt declined to specify any details about talks with Geely.

“Experience and what has been expressed has been very positive,” he said, speaking at the Bauma trade fair in Munich.

Volvo boosted operating profit last year and raised its dividend, saying in January that it expects demand in key markets to hold up in the face of growing economic uncertainty. Since then, headwinds in Europe have increased, with Brexit unresolved and Italy slipping into recession at the end of 2018. Germany’s economic growth this year is expected to slow to less than half the rate previously expected amid global trade disputes.

Volvo is on “strong ground” to meet any increasing challenges, even as markets are expected to weaken, Lundstedt said.

“Recession might be a strong word, which we already guided for during the fourth quarter report, but some sort of correction is rather expected, actually,” he said.

Related reading - https://www.bigmacktrucks.com/topic/52070-communist-party-backed-geely-buys-volvo-stake/?tab=comments#comment-388405

 

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