Geely, current owner of Volvo amongst other brands, took a calculated risk and decided to buy a stake in the Swedish truckmaker AB Volvo.

Geely already owns 100 percent of Volvo cars but decided to dip its financial toes in another Volvo product. According to a report by Reuters, they published earlier today (Dec. 27,2017) the China-based holding company through some major money at Cervian Capital, worth $3.3 Billion in exchange for an 8.2 percent stake in Swedish truckmaker AB Volvo. Although Volvo split from AB Volvo in 2010 after being acquired from Geely, they Chinese automotive company has no plans to reunite the car and truck maker.

AB Volvo itself owns more than a dozen brands of trucks including Mack trucks, Renault, Prevost, Eicher, and a 45 percent stake in China’s largest truck maker, Dongfeng.

Geely has the right expertise when it comes to the Chinese market and has the resources including research and development to electrify AB Volvo’s powertrains and to include autonomous driving technology in their trucks, two technologies that have been picking up steam in the trucking industry as of late.

 

“Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo,” Geely Holding Chairman Li Shufu said in a statement on Wednesday.

Under Geely’s watch, Volvo has thrived with “an operating profit of 10.4 billion Swedish crowns in the first nine months this year, up from 1.6 billion for the whole of 2011, the year after Geely bought Volvo from Ford.”

As for the Swedish government which has Volvo as the country’s largest company by revenue, according to their Enterprise Minister, he’s optimistic about AB Volvo’s new investor.

“The new owner Geely has proven to be a serious investor linked to the development of Volvo Cars, made major investments in Sweden, grown the number of employees and has so far been a success story,” he said to news agency TT.

The price for oil may be stable at the moment but with a barrel of oil creeping up in price since 2016 with no signs of slowing and the proliferation of hybrid and all-electric powertrains in passenger cars, perhaps Geely sees the writing on the wall. The companies that rely on ICE engines will be left out whereas innovative companies that invest in alternative energies early are poised to gain market share.

I’ll be curious to see how this deal goes down and what improvements Geely brings to the table when it comes to AB Volvo.

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