Volvo completes the acquisition of 45% of Dongfeng

8 January 2014

AB Volvo announced that it has completed the acquisition of 45% of the Chinese automotive manufacturer, Dongfeng Commercial Vehicles Co., Ltd. The purchase consideration amounted to RMB 5.5 billion (US$885 million).

This transaction will significantly strengthen the Volvo Group’s position in medium-duty trucks—said the company—while the Group will become one of the world’s largest manufacturers of both medium-duty and heavy-duty trucks.

Volvo signed an agreement in January 2013 with China’s Dongfeng Motor Group Company Limited (DFG), to acquire 45% of a subsidiary of DFG, Dongfeng Commercial Vehicles Co., Ltd (DFCV). DFCV includes most of Dongfeng’s operations in heavy-duty and medium-duty commercial vehicles. The transaction was subject to regulatory approvals that now have been received.

In 2013, DFCV’s pro-forma sales amounted to RMB 35 billion (US$5.64 billion) and the pro-forma operating income to RMB 950 million (US$153 million). The total Chinese market for heavy-duty trucks amounted to about 774,000 vehicles in 2013, while the corresponding figure for the medium-duty truck market was 286,000 vehicles. DFCV had a leading position in both the heavy-duty and medium-duty segments, with sales of 120,600 heavy-duty trucks and 51,000 medium-duty trucks, corresponding to market shares of 15.6 and 17.8%, respectively.

During the first three quarters of 2014, DFCV’s sales amounted to RMB 26 billion (US$4.19 billion) and the operating profit to RMB 1.1 billion (US$177 million). During the same period, DFCV sold 85,000 heavy-duty and 31,000 medium-duty trucks. On September 30, 2014, DFCV had a net financial asset of RMB 3 billion (US$483 million).

Source: Volvo