Volvo Cars and Geely Auto have called off their merger but say they have agreed on a wide-ranging collaboration that will maximise the strengths of the Swedish and Chinese automotive groups. Following a detailed review of combination options, Volvo Cars and Geely Auto have concluded they can ‘secure new growth opportunities in their respective markets through deeper cooperation, while preserving their existing separate corporate structures’.
However, the two companies have confirmed the combination of their existing powertrain operations into a new standalone company. The company, expected to become operational this year, will provide internal combustion engines, transmissions, and next-generation dual-motor hybrid systems for use by both companies as well as other automobile manufacturers.
Håkan Samuelsson, President and CEO of Volvo Cars, says: “Having evaluated different options to realise value, we concluded jointly that a collaboration model between two standalone companies is the best way to secure continued growth and at the same time achieve technological synergies in many areas. We welcome the opportunity of further and deeper collaboration with Geely Auto.”
An Conghui, President and CEO of Geely Auto, adds: “Geely Auto looks forward to partnering more closely with Volvo Cars, achieving significant synergies for our respective businesses. This will enable Geely Auto to accelerate its global expansion, to capitalise on our strengths in China and develop a new generation of world-class new energy vehicles and associated mobility services.”
Li Shufu, Chairman of Geely Holding, the parent company of Volvo Cars and the largest shareholder in Geely Auto, states: “As shareholders and portfolio-managers of both wholly-owned and listed companies, Geely Holding sees significant benefits from deeper partnerships and alliances whilst maintaining independence,” said Li Shufu. “We are encouraged by the potential synergies and growth opportunities created by this collaboration, which will create two even stronger globally competitive companies in the rapidly changing world of automotive technology and new mobility services.”
Volvo Cars had sales of 661,713 cars in 2020 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding since 2010.