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Volvo Cars' Chinese parent company buys $3.3 billion worth of AB Volvo

Geely snaps up 8.7 percent of AB Volvo, maker of Volvo Trucks, from private equity firm Cevian Capital.

Robin Aron

Long, long ago in a country far, far away, Volvo was one big happy family with cars and heavy trucks under all living under one parent company. But in 1999 that all changed when Ford bought Volvo Cars from AB Volvo, makers of Volvo Trucks. That might be changing thanks to the purchase of a $3.3 billion minority share of AB Volvo by current Volvo Cars owner, Geely.

While Geely states that there are no official plans in the works to reunite the Swedish brands, this is clear evidence that someone in Hangzhou has a real crush on the Gothenburg brand. Volvo Trucks is one of the world's leading manufacturers of heavy trucks but it needs the assistance of a company better entrenched in the rapidly expanding Chinese market. That's where Geely comes in -- it also has a great deal of expertise when it comes to autonomous trucks and battery-electric heavy vehicles, both of which would be of great interest to Volvo.

"Given our experience with Volvo Car Group, we recognize and value the proud Scandinavian history and culture, leading market positions, breakthrough technologies and environmental capabilities of AB Volvo," Geely Holding Chairman Li Shufu said in a statement on Wednesday.

This move by Geely continues the company's trend of acquisitions over the last few years. It purchased The London Electric Cab Co. along with majority stakes in PROTON Holdings and Lotus Cars. The brand's stewardship of Volvo Cars was initially met with skepticism but has since seen Volvo emerge as a unique alternative to vehicles from Germany and Japan with increased profits to match. Reuters reports that Volvo Cars brought in $1.26 billion in the first three quarters of 2017, compared to just $193 million in 2011, the first full year of Geely's ownership.