Volvo to Acquire 45 Percent Stake in Dongfeng Subsidiary


Volvo will acquire 45 percent of Chinese vehicle manufacturer Dongfeng Commercial Vehicles (DFCV) in a move that will make it the world’s largest manufacturer of heavy-duty trucks.

Volvo to Acquire 45 Percent Stake in Dongfeng Subsidiary
Volvo is the world’s third largest manufacturer of heavy-duty trucks with 180,000 units sold in 2011.

The deal is worth almost $900 million, and Volvo plans to use the purchase to grab a significant share of the Chinese truck market. Volvo expects the deal to be completed within 12 months.

"China is the world's largest truck market with a total market for heavy trucks equivalent to the European and North American markets combined," Volvo President Olof Persson says.

"This partnership will enable us to significantly strengthen the group's position, both in and outside China."

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

A subsidiary of the Dongfeng Motor Group, DFCV occupied a leading position in China in 2012 in both the heavy- and medium-duty segments. It recorded sales of 102,000 heavy-duty trucks and 45,500 medium-duty trucks, corresponding to market shares of 16.1 percent and 15.7 percent, respectively.

"We are pursuing a clear strategy to achieve our vision of becoming the world leader in sustainable transport solutions," Persson says.

"With this agreement in place, we take a crucial step toward reaching a number of our key strategic objectives such as size and growth in Asia."

Persson says the deal also offers Volvo excellent opportunities to achieve economies of scale in terms of sourcing, development and production for the group's truck operations.

He says there are a number of areas in which cooperation is planned between DFCV and Volvo, such as engines and powertrain components, product platforms and purchasing.

"Joining forces will provide clear benefits for both parties and the right conditions to develop DFCV into a competitive and successful international truck manufacturer with healthy profitability," Persson says.

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