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Volvo Cars and Geely Automobile said they are considering a merger to create a single global group so as to accelerate financial and technological synergies between the two companies.
The combined company would have access to the global capital market through Hong Kong, with the intention to also subsequently list in Stockholm, Sweden. Volvo and Geely said the considered combination would have “the scale, knowledge and resources to be a leader in the ongoing transformation of the automotive industry”, and would preserve the distinct identity of each of the brands Volvo, Geely, Lynk & Co and Polestar. A joint working group is to prepare a proposal to their respective boards.
For full 2019, the Volvo Car Group recorded an operating profit of SEK14.3 billion (US$1.48 billion), up slightly from SEK14.2 billion (US$1.47 billion) in 2018). Revenue over the period amounted to SEK274.1 billion (US$28.39 billion), up 0.8% compared with 2018. Global sales reached a record 705,452 cars, a 9.8% increase year-on-year. “The results underline the comprehensive transformation of Volvo Cars’ finances and operations in recent years, positioning the company for its next growth phase”, said the manufacturer in a statement, highlighting that both profits and margins during the second half of 2019 were better than in the same period of 2018, with profitability driven by continued strong growth in volume, especially in SUVs, as well as cost efficiency measurements initiated early in 2019.
In China, Volvo Cars sold 154,961 cars in 2019 (+18.7%), an all-time record for the Group in China and the highest sales number it has ever reached in a single market. Sales in the U.S. totalled 108,234 cars (+10.1%), while in Europe, the company sold more than 50,000 cars in Germany for the first time in its history, while it realised its best sales result since 1990 in the UK. Markets that also recorded their best ever sales performance included Australia, Belgium, Brazil, the Czech Republic, Hungary, Korea, Poland and Portugal.