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Volvo to be the largest heavy truck maker in the world after joint venture agreement with Chinese Dongfeng

Sunday, 27 January 2013
In a deal worth something closer to Skr6 billion Volvo has bought the majority stake of the Chinese Dongfeng Motor Group's operations in the heavy and medium duty trucks division. The acquisition, which was announced in Beijing on Saturday, means that the Swedish truck giant becomes world leader in heavy trucks.

"China is the world's largest truck market corresponding to a combination of European and North American markets put together, "said AB Volvo 's CEO Olof Persson during a press conference in Beijing, which was held at 11 o'clock on Saturday local time.

AB Volvo and Dongfeng together sold over 400,000 heavy and medium duty trucks 2011.
"This investment will improve Volvo's position in the Chinese market and help us to become more globally competitive, "he said further.

The deal means that AB Volvo, the world's second largest truck maker after German Daimler, will acquire 45 percent of a new subsidiary of Dongfeng Motor Group - Dongfeng Commercial Vehicles, DFCV. The company will manufacture and sell trucks, buses, and the so-called special vehicles of the Dongfengs brand.

The purchase price for the new company is 5.6 billion Chinese yuan, nearly Skr5.8 billion, and will be paid when the deal is completed.

"Dongfeng is a partner we know well, we have worked with for several years and has a management and a product range that we really like, "said Olof Persson said in a statement before the press conference.

"The combination of Dongfengs expertise and strong position in China and the Volvo Group's technical expertise and global presence gives DFCV an excellent potential for growth and profitability, both in and outside China, "he comments.
After two years of decline in the Chinese truck market, the number of truck deliveries to rise to 3.33 million units this year, according to the China Association of Automobile Manufacturers.

Dongfeng Motor, China's second largest auto manufacturer makes cars with Nissan Motor, Honda Motor and PSA Peugeot - Citroën in China.
"The deal with AB Volvo will help Dongfeng to reach outside of China, "said Dongfengs Chairman Zhu Fushou during the press conference this morning.
"It will also help to strengthen the Volvo brand in China."
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