Volvo in partnership deal with China’s Dongfeng 29 January 2013

Volvo has signed an agreement with Chinese vehicle manufacturer Dongfeng Motor Group to acquire 45% of a new subsidiary, Dongfeng Commercial Vehicles, to include the major part of Dongfeng's medium- and heavy-duty commercial vehicles business.

It will cost Volvo Group £569m and make it the world's largest manufacturer of heavy-duty trucks – subject to approval of the anti-trust agencies and Chinese authorities, which both parties believe will be granted within 12 months.

"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," says Volvo president and CEO Olof Persson.

"Combining Dongfeng's strong domestic position and know-how with the Volvo Group's technological expertise and global presence will offer Dongfeng Commercial Vehicles excellent potential for growth and profitability in and outside China."

The transaction with Dongfeng follows the recent agreement between Dongfeng and Nissan Motors, in which Dongfeng purchased the medium- and heavy-duty commercial vehicle operation from the joint venture DFL (owned jointly by DFG and Nissan Motors).

The Volvo Group is currently the world's third largest manufacturer of heavy-duty trucks with 180,000 units sold in 2011.

Dongfeng was the second largest producer of heavy-duty trucks in 2011, with total sales of 186,000 units, of which approximately 142,000 units were produced by the part of the company that will be included in the transaction.

Author
John Challen

Related Companies
Volvo Group UK Ltd

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