Recently, the news that Geely Automobile acquired the 8.2% stake in Volvo Group occupied half of the major foreign auto media websites. Compared with the “coolness†of the Chinese media, the foreign media conducted a lot of experiments and analysis on Geely’s move. Some media believe that Geely Automobile's shareholding is an excellent opportunity for Volvo Group to develop truck business. Some believe that Volvo Group is in the Chinese market where Geely Automobile is located, and some media even point out that this is China's ambition. Let's take a look at what foreign media are saying. Doors And Windows Series Profile Extrusion Line Doors And Windows Series Profile Extrusion Line ,Pvc Profile Extrusion Line,Wpc Profile Extrusion Line,Plastic Profile Extrusion Line Hitech Intelligent Machinery(Ningbo)Co., Ltd. , https://www.machinery-hitech.com
Wall Street Journal:
China puts the auto industry in a strategic position Geely Automobile is currently the most active car company in China, and this time it has entered the Volvo Group, marking Geely Automobile's goal of becoming an international auto company. In recent months, Geely Automobile Chairman Li Shufu has begun to integrate its diversified brand portfolio, which is like the brand controlled by Volkswagen, including products for the mass market, high-end and luxury passenger cars, and commercial vehicles.
This year, Chinese auto companies are quite active in the global market, and this acquisition is the closing of this year. According to Dealogic's data, it does not include the latest transactions of Geely Automobile. Since 2008, Chinese companies have spent more than US$34 billion to acquire overseas auto assets. Most of these transactions occurred in the auto parts industry. In 2015, China National Chemical Co. acquired Pirelli, an Italian tire company, for US$7.86 billion. It is the largest acquisition of Chinese companies in the overseas automotive sector in terms of US dollars. Earlier this year, China's parts supplier Ningbo Joyson Electronic Corp. announced that it had acquired bankrupt Japanese airbag manufacturer Takata for $1.59 billion.
The Chinese government is trying to tighten Chinese investment in other overseas areas (such as the entertainment industry), but the overseas buying tide of the auto industry has not shown signs of slowing down, indicating that the Chinese government has placed the auto industry strategically important.
The entry into the Volvo Group marks the re-entry of Geely Holdings into the commercial vehicle sector. Last year, Geely Holding established a commercial vehicle subsidiary called Yuan Cheng in China. In 2012, Geely Holdings acquired the London Taxi Co. in the UK. From January to November this year, China's commercial vehicle industry grew by 15%, compared with the passenger vehicle market, which grew by only 2%. This prompted Geely Holdings and other automakers to increase their investment in their commercial vehicle brands.
New York Times:
Geely's transaction coincides with China's ambition Geely, led by Li Shufu, was an early supporter of overseas transactions. When it acquired Volvo from Ford Motor, Geely became one of the first companies to acquire technology through acquisitions rather than joint ventures.
Geely did not show signs of stopping: In addition to the announced deal, Geely said in November last year that it acquired the Boston-based Terrafugia, which is developing a flying car.
Geely spokesman Ash Sutcliffe said the company is not worried that the new rules for foreign investment will affect the acquisition of the Volvo Group. "The trade fair will continue to advance and we are very confident about this," Sackcliffe said. “Geely has a long history of investing overseas. I don’t think this will be a big problem.â€
Geely has good reasons for such an investment. Analysts predict that gas truck sales will skyrocket as China strives to get its truck drivers to abandon diesel. This practice is part of a broader campaign to reduce carbon emissions. Mats Harborn, president of the European Union Chamber of Commerce in China, said the deal is likely to be approved because the government wants to improve the transportation industry.
Financial Times:
Geely's most valuable value is to open the Chinese market for the Volvo Group. After nearly two decades of separation, the two companies will once again be driven by the same owner. Geely, the Chinese auto group owned by Volvo Cars, will now become the largest shareholder of Volvo AB, a listed company and truck manufacturer.
For now, Geely has no intention of fully merging the two companies, but even this move to make the two Volvos more closely linked is directly contrary to the broader industry split trend. For example, Volkswagen and Daimler, the owner of Mercedes, are all considering stripping their trucks.
But for Geely, which was little known abroad before the acquisition of the Volvo Car brand in 2010, this transaction is only the latest step in its creation of a global empire in the automotive market. Similarly, Geely entered the truck industry through acquisitions during a period of uncertainty and the purchase price was higher. Given the global truck market's link to infrastructure projects, business confidence and overall consumer spending, it is more susceptible to economic cycles than passenger car manufacturing.
According to a person familiar with the matter, how successful Geely can be depends on the company's ability to exert influence within the Volvo Group. The most valuable value of this new shareholder is the opening of the Chinese market for the Volvo Group. Driven by the online shopping and consumer buying boom, the Chinese truck market has grown substantially in recent years, but it has only basically benefited local manufacturers.
The Volvo Group, Daimler and Paccar together account for 90% of the North American truck market, and each of these three companies has a 0.2% share in the Chinese market. “This is a huge opportunity for the Volvo Group,†Cevian co-founder Christer Gardell told The Financial Times. “Most perhaps the most important thing is the market share in China's heavy truck market.â€
Reuters:
A strategic acquisition Geely's acquisition of Volvo Trucks has reunited Volvo Cars with the Volvo Group.
“We will learn from the successful cooperation experience with Volvo Cars, respect and inherit the Scandinavian history and culture, leading market position, excellent innovation capability and energy saving and environmental protection technology owned by the Volvo Group.†Li Shufu, Chairman of Geely .
At first glance, this seems puzzling. Why does Geely invest in trucks? He already owns Volvo, Polestar, Lynk & Co, Proton and Lotus... The answer may be that Tesla recently launched a truck.
In Li Shufu's view, Geely's Chinese heritage can help truck manufacturers expand further in China. On the surface, Li Shufu wants to build a self-driving electric truck for the Chinese market with Volvo Trucks. But in fact, this acquisition is completely strategic.
Li Shufu’s decision will never be to reunite Volvo cars and trucks, even if he is not satisfied with the 8.2% stake. Geely’s acquisition boom will not stop on Volvo Trucks. Geely tried to buy a 5% stake in Mercedes-Benz parent company Daimler through a discounted stock placement, but was rejected. The latest report shows that Geely is currently seeking to buy its shares on the open market.
Boosted by the transaction, Volvo shares rose, but both A shares and B shares fell more than 2% at the close, Industrivarden shares fell 0.1%. However, Volvo's share price has risen nearly 50% this year due to strong demand from major markets.