(Reuters) – China’s Geely Automobile (0175.HK) said on Monday it is in early discussions with Sweden’s Volvo Car AB about combining the two businesses into a global carmaker with listings in Hong Kong and Stockholm.
FILE PHOTO: A building of the Geely Auto Research Institute is seen in Ningbo, Zhejiang province, China August 4, 2017. REUTERS/Aly Song/File Photo
Zhejiang Geely Holding Group [GEELY.UL], Geely Automobile’s parent group, acquired Volvo from Ford Motor Co (F.N) in 2010.
The combined company would have “the scale, knowledge and resources to be a leader in the ongoing transformation of the automotive industry”, according to the statement.
The combination of two businesses would bring together brands including Volvo, Geely, Lynk & Co and Polestar. Geely’s new energy brand Geometry will also be included, a company spokesman confirmed.
There had been previous discussions about listing Volvo here as a separate company in Stockholm but these were put on hold in 2018.
The parent group, led by billionaire Li Shufu, which has a number of other investments including a 9.7% stake in Daimler (DAIGn.DE) acquired in 2018, a 49.9% stake in Proton in 2017 and majority stake in British sport car brand Lotus, is trying to consolidate assets as the industry adjusts to tougher emissions rules and the rise in demand electric cars.
Last year, Volkswagen (VOWG_p.DE) and Ford said they will spend billions of dollars to jointly develop electric and self-driving vehicles, while FCA (FCHA.MI) and PSA (PEUP.PA) agreed a $50 billion merger to create the world’s fourth-biggest automaker.
In October, Volvo Cars said it would merge its engine development and manufacturing assets with those of parent Geely, creating a division to supply Lotus, LEVC, Lynk and Proton, and also potential rivals with next-generation combustion and hybrid engines.
Geely Automobile sold 1.36 million cars in 2019 and aims to sell 1.4 million cars this year. Volvo sold just over 700,000 cars last year.
(This story has been refiled to add dropped word, paragraph seven.)
Reporting by Yilei Sun in Beijing, Anushka Trivedi in Bengaluru; Editing by Keith Weir and Louise Heavens