Volvo completes Dongfeng deal

Volvo recently completed its purchase of 45 per cent of China's Dongfeng Commercial Vehicles

AB Volvo recently announced it has finalised its purchase of 45 per cent of Chinese truck maker Dongfeng Commercial Vehicles (DFCV), which is a division of China's massive Dongfeng Motor Group Company Limited.

The deal is said to be worth 5.5 billion Chinese yuan (nearly $A1.1 billion).

First announced in January 2014, the acquisition was granted the approval of China's National Development and Reform Commission but it still needed approval from a number of other Chinese authorities. With those authorities now giving the deal the green tick, Volvo can now go ahead with its joint venture, giving the Swedish truck maker added clout in the medium-duty segment while further strengthening its heavy-duty portfolio.

According to Volvo President and CEO, Olof Persson, the strategic allicance will unlock massive opportunities for both brands.

"This strategic alliance is a real milestone and entails a fundamental change in the Volvo Group's opportunities in the Chinese truck market, which is the largest in the world," he says.

"At the same time, it will provide us with the opportunity to become involved in growing DFCV's international business in a manner that will benefit us and our Chinese partner."

Dongfeng is a giant of the Chinese automotive landscape. In 2013 DFCV sold 51,000 medium-duty trucks and 120,600 heavy-duty trucks – figures that give it market share of 17.8 and 15.6 per cent respectively. In 2013 its pro-forma sales totalled $A6.9 billion.

According to Volvo, the total Chinese truck market amounted to 286,000 medium-duty vehicles and 774,000 heavy-duty vehicles in 2013.

An inauguration ceremony to mark the occasion will be held in Shiyan, China, on January 26.

Volvo completes Dongfeng deal

Tags