Geely, Volvo To Merge Automotive Engine Businesses In Push For Electric Vehicles
China Knowledge Online
Oct 08, 2019

Oct 08, 2019 (China Knowledge) - The automotive giant Zhejiang Geely Holding Group Co., Ltd is planning to merge the automotive engine operations of its Geely Auto and Volvo Cars units. Once the merger is completed, the new combined division will carry out research and development of engines and power systems. The new division is also expected to supply up to 2 mln diesel and gasoline-powered engines, including external automotive manufacturers, up from the 600,000 engines currently produced by Volvo.

The consolidation of the two automotive units into an independent supplier will help the Swedish-based Volvo to cut its costs and focus on the development of electric vehicles amidst stricter emissions standards in China and Europe.

This comes after China-based Geely reported a fall of around 40% in net profit in August due to slowdown in demand for cars and a drop of about 30% in Volvo’s operating profit in H1 this year.

Hakan Samuelsson, chief executive officer of Volvo, said that the merger will enable Volvo to “focus on electric powertrains and platforms in-house without starving its internal combustion engine business of resources”.

The new consolidated business division will employ around 3,000 and 5,000 current employees from Volvo and Geely respectively, in functions such as engineering, manufacturing and finance. Minimal impact to employees is expected.

The negotiations on the details of the merger is currently ongoing. Volvo and Geely hopes to seek its board’s approval for the planned merger next year, after which both automotive units will have to seek for approval from regulators from their respective countries.

Volvo hopes that electric vehicles make up at least 50% of its entire global sales by 2025.

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