Volvo Construction Equipment (Volvo CE) has announced its decision to sell its 70% ownership stake in Shandong Lingong Construction Machinery Co (SDLG) to a fund mainly owned by the Lingong Group (LGG). The deal is valued at SEK 8 billion, equivalent to 6 billion RMB. This transaction is anticipated to positively impact Volvo CE’s operating income by SEK 1 billion upon closing, though this is subject to currency fluctuations.
The divestment marks a strategic shift for Volvo CE, which plans to concentrate on specific customer segments within China and enhance its use of the Chinese supplier ecosystem. Melker Jernberg, Head of Volvo CE, stated: “SDLG has served us well since 2006. However, with increasing competition, the need to transform to new technologies as well as strengthening the interaction with customers, we need to re-focus. China remains an important market for us, and we aim to capitalize on our opportunities by focusing on sustainable solutions in targeted segments.”
Volvo CE will focus on offering premium products under its brand name and utilize China’s production and development capabilities for both domestic and export markets. The company has been operating an excavator production facility in Shanghai since 2002 and recently announced new production lines.
The SDLG collaboration began in 2006 when Volvo acquired a majority stake while LGG remained a minority shareholder. In 2024, SDLG contributed approximately 2% of Volvo Group’s turnover but had minimal impact on operating income.
The completion of this transaction is expected in the second half of 2025 pending regulatory approvals. It may result in a negative tax impact estimated at SEK 1.6 billion due to currency fluctuations.
This information was released by AB Volvo pursuant to EU regulations.
For further details or inquiries:
Claes Eliasson
Head of Media Relations
+46 76 553 7229
[email protected]
Further information can be found at volvogroup.com or through their LinkedIn updates.
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