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Geely Holdings reduces its stake in Volvo Group

2024-03-04 Update From: AutoBeta NAV: AutoBeta > News >

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According to media reports, Geely Sweden spokesman Stefan Lundin confirmed that Zhejiang Geely Holdings Group (hereinafter referred to as Geely Holdings) sold Volvo shares worth more than 7 billion Swedish kronor (4.902 billion yuan), reducing its stake from 8.2% to 6.8%. It is understood that this is the first time Geely Holdings has reduced its stake since it bought a stake in Volvo Group in 2017, and Geely Holdings remains the second largest shareholder after the reduction.

"Geely's strategic long-term investment in Volvo has not changed," Lundin said. As of press time, Geely Holdings has not responded publicly.

In December 2017, Geely Holdings announced an agreement with European fund company Cevian Capital (hereinafter referred to as Cevian) to acquire 88.47 million A shares and 78.77 million B shares of AB Volvo. After the project is delivered, Geely Holdings will own 8.2 per cent of Volvo Group, making it its largest shareholder and have 15.6 per cent of the voting rights. The acquisition is another important strategic investment by Geely Holdings after its acquisition of Volvo, and it is also one of the largest acquisitions by Chinese companies in Sweden.

The Volvo Group acquired by Geely Holdings belongs to the same family as Volvo Automobile Group (Volvo Cars), which was acquired in 2010. Unlike Volvo cars, the Volvo Group has a wider range of businesses, including trucks, passenger cars, construction equipment, ships and industrial engines, and owns Volvo trucks, UD trucks, Renault trucks, Volvo buses, Nova buses, Pervo buses, Volvo Bunda engines and other brands. At that time, Geely Holdings said that the purpose of acquiring Volvo Group was to support its future development in commercial vehicles and construction equipment, and to explore opportunities for cooperation in frontier areas such as electrification, self-driving and car networking, so as to develop a global business for Volvo Group and continue to improve its profitability.

It is worth mentioning that Geely Holdings also reduced its stake in Volvo last November. Geely Holdings announced the reduction of Volvo's stake in Volvo from 82% to 78.7%. Geely Holdings explained in the announcement that in order to further enhance the value of Volvo cars and provide more opportunities for institutional and individual investors, it decided to release a small number of shares in Volvo cars as planned to increase its liquidity and create long-term sustainable value. Perhaps the same is true of the sale of Volvo Group.

Volvo is a well-known Swedish luxury car brand, founded in Gothenburg, Sweden in 1927. In 1999, the Volvo Group sold its Volvo car business to Ford, which had to resell it because of continued losses. In 2010, Geely Holdings and Ford officially signed an agreement in Gothenburg, Sweden, to formally acquire a 100% stake in Volvo for US $1.8 billion. Volvo became a brand owned by Geely Holdings, which is also a famous case of "snake swallowing elephant" in automobile history. In 2017, Geely Holdings, Geely Motor and Volvo signed a joint venture agreement, Lectra became a three-way joint venture brand, and the joint venture company was formally established.

Sales figures show that Volvo sold 707800 vehicles worldwide in 2023, up 15% from a year earlier, the highest in history since Geely Holdings acquired Volvo. Of these, Volvo sold 170000 vehicles in China, up 5 per cent from a year earlier. Behind the record sales is a sharp increase in electric vehicles, including 113000 pure electric vehicles, an increase of 70% over the same period last year, and plug-in hybrid vehicle sales of more than 152000, up 10% from the same period last year.

Net sales of Volvo Group rose 15 per cent year-on-year to 132.4 billion kroner (about 92.6 billion yuan) in the third quarter of 2023, according to financial data. Third-quarter operating profit was 19 billion kroons (about 13.29 billion yuan), higher than analysts' consensus forecast of 16.3 billion kroons and significantly higher than 11.9 billion kroons in the same period a year earlier.

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