Geely Buys 8.2 Percent Of AB Volvo, Becomes Largest Shareholder

First things first, we need to get one thing straight out of the box. And that is, there are three Volvo companies out there. Volvo Cars was spun off from AB Volvo (a.k.a. Volvo Group) in 1999 thanks to the Ford Motor Company, whilst Volvo Trucks soldiered on as the premier manufacturer of the group. In fact, the truck-making division is the second-largest heavy-duty truck brand in the world.
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To make things even more complicated, Volvo Trucks is part of Volvo Group Trucks, alongside brands such as Renault Trucks, Mack Trucks, and UD Trucks. Make no mistake about it, the Swedish manufacturer is big business in this pillar of the automotive industry. And because of its profitability, investors are interested in getting a piece of the action, investors that include Geely.

Indeed, the company that owns the passenger car division since 2010 has recently purchased 8.2 percent of AB Volvo, with the endgame being complete control in the near to mid future. Geely, which also acquired 51 percent of Lotus Cars in 2017, bought $3.3 billion in shares from Cevian Capital, but there are no plans to merge Volvo’s car and truck divisions.

Even though Zhejiang Geely Holding Group Co., Ltd is the biggest individual shareholder in AB Volvo at the present moment, it’s the second in terms of voting rights behind a holding company going by the name of Industrivarden AB. The question is, why would the Chinese higher-ups be interested in it?

The answer is much simpler than you would expect. Think about what Geely was after when it acquired Volvo Cars: infusing the automaker’s technology into its other passenger vehicle brands, including the London Electric Vehicle Company that manufactures the Volvo-influenced TX5 plug-in hybrid taxi.

More to the point, the know-how of AB Volvo is of great value to Yuan Cheng Auto, the premier member of Geely Commercial Vehicle. Established in 2016 and aiming to bring “energy-focused commercial vehicles into the [Chinese] marketplace,” it’s more than obvious what Geely is after from this symbiosis.

Have you noticed that Geely is trying to pull off a Volkswagen Group of its own? Here’s a quick rundown of the brands it currently controls: Geely Auto, Volvo, Polestar, Lynk & Co, LEVC, Proton, Lotus, and Terrafugia. And on that note, where do you see the Chinese juggernaut in five years time?
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About the author: Mircea Panait
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After a 1:43 scale model of a Ferrari 250 GTO sparked Mircea's interest for cars when he was a kid, an early internship at Top Gear sealed his career path. He's most interested in muscle cars and American trucks, but he takes a passing interest in quirky kei cars as well.
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