Merger in the Works for Volvo, Parent Company?
Volvo Cars, cast off by a struggling Ford and subsequently picked up by an expansionist Geely 10 years ago, might forge closer ties with its Chinese parent. The relationship could become a marriage.
On Monday, Geely said the two companies have begun talks on turning the two entities into a combined automaker.
In a joint media release, Volvo Car AB and Geely Automobile Holdings Limited stated that the proposed merger would result in “a strong global group that could realise synergies in cost structure and new technology development to face the challenges in the future.”
The combined entity would be listed in both Hong Kong and Stockholm. More importantly for consumers, existing brands would remain unchanged, with Volvo still fielding its electrified Polestar marque.
The upstart Chinese Lynk & Co brand, which still aims to get American consumers on board, will also continue. Currently, no Chinese-brand passenger vehicles are sold in North America, though Europe is no stranger to them. In the past, Volvo and Geely have collaborated on a joint vehicle architecture (CMA), and in 2017 it was learned that Volvo would share engine technology with its parent. All signs pointed to a closer relationship in the future.
Volvo has ambitious plans in the electrified realm; the automaker aims to draw 50 percent of its sales from EVs by 2025. Meanwhile, Geely is a major provider of “new energy vehicles” in its home market, unveiling the new, low-priced Geometry brand in 2019.
“As of the date of this announcement, no concrete timetable or detailed plans of the Proposed Transaction have been formed,” the two automakers stated, adding that any deal would require the sign-off of both companies’ boards. “The Company will make further announcements in relation to the Proposed Transaction if and when required.”
[Image: Twin Design/Shutterstock]
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Of course I wonder what that means for Lotus. On the other hand I got my old Elan running after a winter of work, but found some other minor problems to deal with. The joys of a 55 year old British sport car.
Geely wants to be one automaker, but it understands that it would take decades (if it were possible at all) for any Chinese brand name to match the brand equity of Volvo in the West. And I expect they probably understand that having the vehicles styled in Sweden is a competitive advantage. Expect to see manufacturing concentrated in China, and design in Sweden.