Dongfeng Volvo approved by the Development and Reform Commission is expected to be completed by mid-year
2019-04-27 14:03:21
Recently, the Swedish truck manufacturer Volvo Group stated that the China Development and Reform Commission has approved the joint venture project between the group and Dongfeng Motor, but it still needs to be approved by other competent authorities. It is expected that the transaction will be completed in mid-2014.
The Volvo Group signed a contract with Dongfeng Motor in January 2013. The two companies plan to jointly establish a new Dongfeng Commercial Vehicle Company. Dongfeng Motor and the Volvo Group will hold 55% and 45% respectively. The new Dongfeng Commercial Vehicle Company will develop, produce and sell "Dongfeng" brand vehicles. Products cover medium-heavy trucks, passenger cars, special vehicles and chassis, engines, gearboxes, etc.
In 2002, Dongfeng Motor and Nissan Motor Co., Ltd. formed a joint venture "Dongfeng Motor Co., Ltd." when its commercial vehicle segment was injected as an asset package. As a result, Dongfeng Motor repurchased mid- and heavy-duty commercial vehicle business and assets from Dongfeng Motor Co., Ltd. and transferred most of its business and assets to the newly established Dongfeng Commercial Vehicle Company.
After a series of capital operations, the Volvo Group acquired a 45% stake in Dongfeng Commercial Vehicle Co., Ltd. for RMB 5.6 billion, while the other 55% was funded by Dongfeng Motor's existing commercial vehicle assets.
Dongfeng Motor insiders said that as a controlling shareholder, Dongfeng Motor’s board seats and other areas occupy a clear dominant position. The board of directors of Dongfeng Commercial Vehicle Co., Ltd. consists of 7 members, of which Dongfeng Motor has appointed 4 members, Volvo Group has appointed 3 members, Dongfeng Motor has appointed the chairman and general manager, and Volvo Group has appointed the vice chairman.
It is worth mentioning that the Volvo Group entered China as early as 10 years ago, but the result of "marriage" ended in "losing Maicheng." In June 2003, China National Heavy Duty Truck Group and Volvo Group invested 1.6 billion yuan to form Jinan Huawo Truck Co., Ltd.. In 2005, it only produced more than 200 vehicles. In early 2006, Huawo Truck Company completely suspended production. In 2009, Sinotruk and Volvo Group announced the termination of cooperation.
The address of the Dongfeng Volvo Truck Joint Venture Company is located in Shiyan, Hubei, and Shiyan is the birthplace of Dongfeng Commercial Vehicle. In addition to the traditional four major process blocks for assembly, welding, painting and stamping, an engine plant will be built at the manufacturing site.
Affected by the European debt crisis, Volvo Group's performance in recent years is not optimistic. In the second quarter of 2013, the Volvo Group's turnover reached 72.8 billion kroner, which was a year-on-year drop of 12%. Operating profit margin rose sharply to 4.5% from the first quarter, but it still fell by half year-on-year.
The CEO and CEO of the Volvo Group, Eurof Payson, said that China's truck market is equivalent to the sum of Europe and North America and is the world's largest truck market. Volvo regards China as a strategic plan.
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