AutoBeta(AutoBeta.net)12/03 Report--

As we all know, Geely, a leading domestic car company, and Volvo, a multinational luxury brand, announced plans for a merger in February this year. After the merger, Geely will also become a multinational car company, but due to some factors, the two sides suspended the merger plan until recently re-announced that they would resume negotiations.

According to media reports, Hakan Samuelsson, chief executive of Volvo, said in an interview with the Financial Times that talks on the merger or alliance between Volvo and Geely could resume in the first quarter of next year. The restructured assets of both sides will be included in Geely Motor's Hong Kong listed company and will be considered for future listing in Sweden.

It is understood that the planned merger of Volvo and Geely was suspended because Geely was seeking to list Science and Technology Innovation Board in Shanghai in September, and Geely had to ensure that there was no change in its capital structure before postponing negotiations until 2021. Now, the resumption of merger talks between the two sides means that the merger plan will also be part of Geely's next process.

After a successful merger, both sides will maximize their interests, in which Geely is likely to share a platform with Volvo and gain a "heritage" from Volvo, a leading industry in safety and self-driving technology. Geely has many suppliers in China, and Volvo can cooperate more with more domestic suppliers.

However, Samuelsson said that both sides will retain their identities after a successful merger in the future, and that the merger is more like building an alliance to achieve more coordinated development to meet future challenges.

That is, after the merger and reorganization of Geely and Volvo, the new group will maintain the uniqueness of Geely, Volvo, Lecker and Star brands. This means that if Geely and Volvo set up a new group in the future, Geely and Volvo will still develop independently in the areas of brand operation and marketing services.

Earlier, Li Shufu, chairman of Geely holding Group, said that he hoped to further strengthen cooperation and coordination and tap greater growth potential through restructuring. Volvo also announced that the integration is aimed at deepening cooperation between the two sides and more effective coordination in technology research and development, cost control and finance.

According to Ervo Motor's results for the first half of 2020. Due to the impact of COVID-19 's epidemic on the global car market, Volvo's first-half operating income fell 14.1 per cent to 111.8 billion Swedish kronor, while net income was minus 1.171 billion Swedish kronor, down 134.5 per cent from a year earlier, according to financial data.

However, the Chinese market remains Volvo's largest single market, and Volvo's sales in China returned to growth in the second quarter of this year, making up for the decline in the first quarter. Volvo's sales in China fell by only 3% in the first half of 2020, outpacing the decline in the overall market.

For Geely, the merger with Volvo is also an important part of its global push. At present, Geely has 8 sub-brands of Geely, Lecker, Volvo, POLESTAR, Proton, LOTUS, London Electric car and long-distance car, covering almost most of the passenger car segments. In the next three years, through the strategic project cooperation of Geely, Lecker, Proton, Lutes and smart brands, Geely will accelerate the process of globalization.

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