AB Volvo completed the purchase of 45% of Chinese automotive manufacturer Dongfeng Commercial Vehicles for approximately $884 million.
Volvo signed an agreement in January 2013 with Dongfeng Moto Group to acquire 45% of its commercial vehicle subsidiary, which includes most of DongFeng’s operations in heavy-duty and medium-duty commercial vehicles. To complete the transaction, approval had to be granted from the Chinese competition authority and other regulatory organizations.
The acquisition strengthens Volvo Group’s position in medium-duty trucks and will make the Volvo Group one of the world’s largest manufacturers of heavy and medium-duty trucks, according to the company. The Chinese truck market is the largest in the world, amounting to 774,000 heavy-duty trucks and 286,000 medium-duty trucks in 2013.
Dongfeng was the leading manufacturer in both markets with sales of 120,600 heavy-duty and 51,000 medium-duty trucks and a market shares of 15.6% and 17.8% respectively.
“This strategic alliance is a real milestone and entails a fundamental change in the Volvo Group’s opportunities in the Chinese truck market,” said Olof Persson, Volvo’s president and CEO. “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.”