Geely secures Volvo purchase finance

Chinese car maker Zheijiang Geely Holding Group is a step closer to becoming the new owner of Swedish firm Volvo Cars after announcing that it had secured the 15 billion kronor ($2.1 billion) in required financing, a report said on Wednesday.

“Financing for the Volvo deal was concluded in recent days,” a source told

Swedish financial daily Dagens Industri (DI).

The funds are now in Geely’s bank account, and Ford has witnessed and approved documentation, according to DI’s source.

It could still take time for the deal to be finalised as the parties need to go over all the relevant documents and make sure they are in line with legislation in China, Sweden and the United States, DI said.

“This is a very complex and time-consuming process,” DI’s source said, adding that approvals were still needed from some of the relevant authorities.

The backers of the deal are reported to be Chinese financial institutions and regional authorities which have secured the financially strained Chinese firm’s purchase of Volvo Cars.

Ford announced in late 2009 it had agreed terms to sell its Swedish subsidiary Volvo Cars to Geely for a reported $2 billion.

If completed, the deal will bring to an end Ford’s decade-long association with the Swedish brand.

While Geely has denied that production will be moved from Sweden to China, it has previously unveiled plans to establish a factory outside of Beijing with a production capacity of 300,000 cars.

Nonetheless, trade union leaders in Sweden have expressed fears that the deal with Geely will mean cuts at Volvo Cars, which has 22,000 employees worldwide, including 16,000 in the Scandinavian country.

An agreement for Geely’s takeover of Volvo Cars is due to be undersigned during March, and the actual takeover is anticipated to be completed at some point before the end of June.

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Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.