Volvo AB will become the world’s largest manufacturer of heavy-duty trucks after acquiring 45 per cent in a new subsidiary of China's Dongfeng Motor Group.
“This is a very exciting venture that will combine the best of two worlds, strengthening the positions of the Volvo Group and Dongfeng and offering excellent opportunities to both parties,” said Volvo’s President and CEO Olof Persson in a press statement.
The new company is called Dongfeng Commercial Vehicles (DFCV), and it includes the major part of Dongfeng’s medium- and heavy-duty commercial vehicles business.
“Combining Dongfeng’s strong domestic position and know-how with the Volvo Group’s technological expertise and global presence will offer DFCV excellent potential for growth and profitability in and outside China,” said Olof Persson.
“China is the world’s largest truck market with a total market for heavy trucks equivalent to the European and North American markets combined.”
The agreement was signed on Saturday and means the Volvo Group will acquire 45 per cent of the new company for almost 5.8 billion kronor.
“With some pride I can say that this is the largest Swedish industrial investment in China ever," said Olof Persson on the phone from Beijing to Göteborgs-Posten.
Olof Persson also said that the deal could have positive effects for jobs in Gothenburg.
“Our experience from growing with the emerging countries and establishing us there is that it generates activities in all of Volvo, when it comes to research and development, production technologies, the IT system and much else. This has over time provided more jobs in Gothenburg. It is impossible to guarantee anything, but we see no reason for why this wouldn’t follow the same patterns as we have seen on the other occasions.”