By on February 10, 2020

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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11 Comments on “Merger in the Works for Volvo, Parent Company?...”

  • avatar
    cimarron typeR

    Save for a few engineers and designers saving their jobs, I don’t get what Swedish Volvo would get from this partnership. Essentially, the Volvo name and reputation has been sold off.I’m worried for the American Volvo factory workers future, seemingly most anything electric will be made in China

  • avatar

    Geely buying Volvo was always a “frog in a pot” situation. Sure, the naysayers said we shouldn’t worry, Volvo will still be run by Swedes and the Chinese will be hands off. But I can see steam starting to rise, and the first few bubbles are floating to the surface…

    • 0 avatar

      That’s a very possible scenario you’re describing. From what I’ve seen, I feel like Geely is smart enough not to do anything detrimental to the brand and it’s loyal followers.

      • 0 avatar

        They already did. Just look inside any current Volvo. It would be disingenuous to pretend that the proliferation of the electronic gewgaws, blinking lights and touch-controls – all of those are anathema to classic Volvo customers – have nothing to do with their Chinese owners.
        As far as I’m concerned, Volvo is dead.

  • avatar

    “the automaker aims to draw 50 percent of its sales from EVs by 2025”

    Besides limitations on battery supply they’ll be constrained by customer supply. No one except Tesla is selling EVs in more than minuscule volume and a lack of customers is why. The EV “revolution” must be causing panic in the C-suites.

    • 0 avatar

      In major Chinese cities, sometimes EVs are the only cars available for the plebs to buy without a 2-year waiting period. It’s easy to make and meet your projections when the government makes alternatives impossible.

    • 0 avatar

      I totally agree, many manufacturers are jumping on the bandwagon of EV products and unless adoption sky rockets which I don’t see as current products cannot compete with non EV products from a practical perspective, then many of these manufacturers are going to be in dire financial straits after investing so heavily in EV’s with no major uptick in sales.

  • avatar

    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.

  • avatar

    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.

    • 0 avatar

      Why? Volvo has big facilities at “home” in Sweden and especially in Belgium. Plus its US facility. Geely doesn’t strike me as a company that would invest so much recently in its European facilities only to abandon them on a whim. It would be terrible PR for a start. Geely has bought almost 10% of Mercedes stock, and is co-operating on the new Smart car, supposedly. If Geely doesn’t watch its p’s and q’s, they’ll shoot themselves in the foot with customers who expect the real thing, not some ersatz variety. And Geely doesn’t strike me as being run by a fool.

      What has happened is that virtually all the trim and a lot of components are made in China and shipped to Europe via rail, cutting out local suppliers. There is a two way scheme for bringing Volvos like XC60 made in China to Europe, and taking back models like XC40 made in Belgium to China by rail. China is Volvo’s biggest market. But assembly itself continues at the older plants.

      If you’d said that if by some miracle Volvo car sales increase enough to warrant a new factory, then sure I’d expect that facility to be in China. Personally I find the product ridiculously overpriced for what you get, but customers don’t care what I think or what most of the prognosticators around here think, so sales may increase.

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