Volvo 2012 Annual Report Download - page 55

− This is a very exciting venture that will combine
the best of two worlds, strengthening the pos-
itions of the Volvo Group and Dongfeng and
offering excellent opportunities to both parties,
says Volvo’s President and CEO Olof Persson.
Combining Dongfeng’s strong domestic pos-
ition and know-how with the Volvo Group’s tech-
nological expertise and global presence will
offer DFCV excellent potential for growth and
profitability in and outside China.
Completion within a year
Completion of the transaction is subject to certain
conditions, including the approval of relevant anti-
trust agencies and Chinese authorities. The pur-
chase consideration amounts to RMB 5.6 billion.
The ambition is to complete the transaction as
soon as possible and completion is expected to
take place within approximately 12 months from
signing. Payment of the purchase price will increase
Volvo’s net debt by approximately SEK 6 billion.
The Volvo Group is the world’s third largest
manufacturer of heavy-duty trucks with 180,000
units sold in 2011. Dongfeng was the second
largest producer of heavy-duty trucks in 2011,
with total sales of 186,000 units, of which
approximately 142,000 units were produced by
the part of the company that will be included in
DFCV.
− We are pursuing a clear strategy to achieve
our vision of becoming the world leader in sus-
tainable transport solutions, says Olof Persson.
With this agreement in place, we take a crucial
In January of 2013, AB Volvo signed an agreement with the Chinese vehicle
manufacturer Dongfeng Motor Group Company Limited (DFG) to acquire
45% of a new subsidiary of DFG, Dongfeng Commercial Vehicles (DFCV),
which will include the major part of DFG’s medium- and heavy-duty com-
mercial vehicles business. At completion of the transaction, the Volvo Group
will become the world’s largest manufacturer of heavy-duty trucks.
step toward reaching a number of our key stra-
tegic objectives such as size and growth in Asia.
The world’s largest truck market
During 2012, the Chinese market for heavy-duty
trucks totaled approximately 636,000 vehicles,
while the corresponding figure for the medium-
duty market was 290,000 vehicles. DFCV occu-
pied a leading position in China in both the
heavy- and medium-duty segments, with sales
of 102,000 heavy-duty trucks and 45,500
medium-duty trucks, corresponding to market
shares of 16.1% and 15.7%, respectively.
The partnership with DFG not only provides
the Volvo Group with ownership in the largest
heavy-duty and medium-duty truck manufacturer
in China, but also offers excellent opportunities to
achieve economies of scale in terms of sourcing,
development and production for the Group’s
truck operations. There are a number of areas in
which cooperation is planned between DFCV and
the Volvo Group, such as engines and powertrain
components, product platforms and purchasing.
− In Dongfeng, we have a partner that we
know well, having worked together for several
years, and with a management team and a prod-
uct range that we really appreciate, says Olof
Persson, Volvo President and CEO. Joining
forces will provide clear benefits for both parties
and the right conditions to develop DFCV into a
competitive and successful international truck
manufacturer with healthy profitability.
Strategic alliance with Chinese
company Dongfeng Motor Group
China, 46%
India, 12%
EU29, 13%
North America, 11%
South America, 8%
Russia, 4%
Other, 6%
881,000 units in China
World’s largest truck markets
above 14 tons in 2011
51