Volvo expands global footprint

Swedish truck manufacturer, Volvo Trucks, is willing to pay more than $900 million for a 45 per cent stake in a new subsidiary of Chinese automotive giant, DongFeng – a step that may help the Swedish company become the world’s largest maker of heavy-duty trucks and overtake German powerhouse, Daimler.

The Swedish company said that it had signed an agreement with DongFeng Motor Group (DFG) to acquire 45 per cent of its new subsidiary DongFeng Commercial Vehicles (DFCV), which will include the major part of DFG’s medium- and heavy-duty commercial vehicle business.

In a press statement, AB Volvo's CEO Olof Persson referred to the partnership with DongFeng as 'the best of both worlds'. “DongFeng is a partner we know well, which we have worked with over the course of several years and which has a leadership and a product assortment which we really like,” Persson said.

DFCV holds a market share in China of around 16.1 percent within heavy duty trucks and 15.7 percent within medium-duty trucks. The firm has 28,000 employees and its head office is located in Wuhan in Hubei province and its truck operations and manufacture are concentrated in Shiyan, also in Hubei.

The deal, worth 5.6 billion yuan ($900 million, EUR669 million), is conditional upon approval from the relevant authorities and is expected to take 12 months to complete.

After the deal was announced, Volvo shares rose to an 18-month high.

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