- Volvo Cars and Geely Auto form joint venture to cooperate on vehicle technologies and component-sourcing.
- Volvo Cars to take stake in LYNK & CO.
20 July 2017, Hangzhou, China. Zhejiang Geely Holding Group (Geely Holding), China’s leading privately-owned automotive group, has today signed a memorandum of understanding with Volvo Cars to create a new joint venture enabling closer co-operation between Volvo Cars and Geely Auto Group (Geely Auto) on shared vehicle technologies and component-sourcing.
In parallel, Geely Holding, Volvo Cars and Hong Kong-listed Geely Auto Holdings today also signed a memorandum of understanding that will pave the way for Geely Holding and Volvo Cars to take a 50 per cent stake in LYNK & CO, the international premium brand launched last year. Geely Auto will retain the remaining 50 per cent of LYNK & CO.
The two initiatives represent a move towards closer collaboration between Geely Auto, Volvo Cars and Geely Holding, which acquired the luxury Swedish car group from Ford Motor Company in 2010. Geely Holding is also the largest shareholder in Geely Auto.
Geely Holding Chairman Li Shufu said: “We will unlock significant benefits across our portfolio by sharing both technologies and next-generation vehicle architectures. I am confident these synergies can be achieved while preserving the separate identities and strategic autonomy of our different automotive brands.”
Geely Holding, Geely Auto and Volvo Cars intend to share existing and future technologies such as vehicle architecture and engine technologies based on cross-sharing license arrangements, pursue industrial co-operation under the joint venture and jointly develop next generation electric vehicle systems that will be fully managed by the new joint venture.
All brands under Geely Holding will also benefit from shared IP, joint purchasing arrangements and wider economies of scale as part of the joint venture.
“Partnerships to share know-how and technologies are common practice in the automotive industry. This is the model we are adopting,” said Håkan Samuelsson, Volvo President and CEO. “This planned collaboration will strengthen Volvo’s ability to develop next generation electrified cars.”
Alain Visser, Senior Vice President of LYNK & CO, added: “This gives our brand a solid global foundation for increased economies of scale, harnessing the advanced technologies of Volvo Cars, combined with our unique and differentiated LYNK & CO business model.”
News of the technology joint venture and the LYNK & CO shareholder agreement coincided with the announcement today of 2017 first half results by Volvo Cars. The company reported revenues up rose to SEK99.1bn from SEK84.2bn while the operating profit margin improved to 6.8 per cent from 6.6 per cent a year earlier amid rising demand for its award-winning vehicles in the six months to June 30, 2017.
Pending final agreements, the joint venture, the technology license arrangements and the LYNK & CO transactions are due to be completed shortly.
Notes to editor:
For the Volvo Cars release please refer to: https://www.media.volvocars.com/global/en-gb/media/pressreleases/210908