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After Geely acquired Volvo, Volvo Group issued a statement saying that Geely’s acquisition was half owned by Volvo brand. In addition to the car, the other half still belongs to the Volvo Group.
As Europe's largest heavy-duty truck manufacturer and North America's third-largest heavy-duty truck manufacturer, Volvo's spin-off of its automotive business focused on commercial transportation is not going well in China.
In November 2009, Volvo Group formally announced the termination of its cooperation with Sinotruk. It will sell its stake in Jinan Huawo Truck Co., Ltd. and withdraw from the joint venture, which marks the end of this originally scheduled 30-year cooperation.
In response, Jiang Yu, vice president of Volvo Capital, said that Volvo Group will focus on cooperation with Dongfeng and continue to maintain the import of Volvo Trucks and Renault Trucks, and its main business in China - construction machinery will continue to strengthen.
From the end of the fruitless cooperation between Volvo and China National Heavy Duty Truck, Volvo’s commercial vehicles are facing an embarrassing situation in China in view of the twists and turns of Dongfeng’s joint venture roads and the not-quite-imported trucks.
Dedicated to construction machinery
Compared with the tortuous commercial vehicle joint venture road, Volvo's development in the field of China's construction machinery is also considered smooth.
On March 23rd, from the Volvo Group, Volvo CE had approved the investment of 50 million Swedish kronor to purchase land in Jinan, China to establish a product design and R&D center dedicated to the needs of BRIC customers.
Four years ago, Volvo acquired Shandong Linggong Construction Machinery Co., Ltd. (hereinafter referred to as Shandong Lingong or Linggong), and Volvo Construction Equipment will obtain 70% of Shandong Lingong.
Volvo hopes to become the world's third-largest construction machinery manufacturer, and must make breakthroughs in the Chinese market to ensure the realization of China's market share. If Volvo values ​​the fighting strength of Lingong in the mid-range market in China, Volkswagen's technology and global channel advantages have become the most attractive elements for Lingong. Volvo hopes to use advanced technology + International. Channel and Chinese company's speed and execution to achieve a qualitative breakthrough in China.
The design and technology center of Volvo will be located in Jinan, the capital city of Shandong. In order to be ready for use as soon as possible, Volvo has raised 40 million US dollars for this project. According to a person familiar with the matter, Volvo's partner in China, Shandong Lingong, has developed its own brand “SDLG excavator†products under its support. The establishment of a technology center is also largely to strengthen temporary workers and Volvo. Cooperation between brands.
“We are very confident in the Chinese market. Even under such a stagnant economic environment, we will still insist on investing in China.†Volvo Construction Equipment Asia executives once said: “The Chinese government’s 4 trillion economic stimulus plan will be Volvo Construction Equipment offers more new business and development opportunities."
The twists and turns of the joint venture
Before long, Volvo saw the rich potential of China's commercial vehicle market. The Volvo Group has made market predictions and believes that the sales volume of the Chinese truck market will reach 1.5 million by 2010, which will be the sum of the demand of Japan, South Korea and Southeast Asian countries, and it is expected to become the second largest heavy truck market after the United States. In 2003, the Volvo Group, which had expanded globally, finally opened up a gap in the Chinese truck sector. Jinan Huawo Truck Co., Ltd., a joint venture with China National Heavy Duty Truck, was officially established.
However, due to the difficulty of accepting Volvo trucks whose price exceeds RMB 600,000 in the domestic market, the project has been stagnant before. The two parties tried several times to restart Huawo's operations, but they did not reach a final goal. At the same time, after the establishment of the joint venture, it did not bring significant advancement to the localization of Volvo heavy trucks. With the announcement of the establishment of a new joint venture between Sinotruk and German MAN in mid-July 2009, Volvo opted to withdraw its cooperation with Sinotruk.
In fact, Volvo started to look for new partners in the early days of Volvo and Sinotruk cooperation, and Dongfeng entered its vision. Japan’s Nissan Diesel had a joint venture with Dongfeng – Dongfeng Nissan Diesel. After Volvo acquired Nissan Diesel, it naturally became a collaboration between Volvo and Dongfeng.
In January 2007, Volvo disclosed that it had signed a framework agreement with Dongfeng, and the two parties are negotiating on the cooperative production of commercial vehicle projects.
Because the two sides still need to solve the problem of capital and equity, they also failed to reach an agreement in the cooperation ideas. The cooperation negotiations between the two parties were once again grounded. A year later, Volvo, which has repeatedly suffered setbacks at Hua He, announced that it will finalize a deal with India’s third-largest commercial vehicle manufacturer, Eicher Automotive Co., Ltd., and set up a new joint venture company, VE Commercial Vehicles, in India.
After Volvo withdrew from the Huawo project, it brought hope to the resumption of the Dongfeng joint venture project. However, no progress has been reported so far. The Volvo commercial vehicle joint venture project in China is still a suspense.
As the Volvo Commercial Vehicle's joint venture in China has met with resistance, industry insiders commented that China's commercial vehicle market is different from the passenger vehicle market. More than 90% of commercial vehicles are self-owned brands. Foreign brands are expensive because they are With only a few thousand vehicles sold each year in China, it is difficult to form a scale.
With the growing strength of domestic heavy-duty truck companies and international well-known heavy-duty truck companies entering China in a joint venture, what are the Chinese opportunities for Volvo's commercial vehicles?
In this situation, Volvo should change its strategy, instead of continuing to implement the brand's technology into China. It can introduce technology in advance and then penetrate into the brand.