Geely Auto – a subsidiary of Zhejiang Geely Holding Group (ZGH) – and Volvo Cars, have announced plans for a possible merger between both companies to increase financial and technological synergies between the two automakers.

For now, there’s no official timeline as to when the merger would happen, but the companies will establish a joint working group headed by Hakan Samuelsson, president and CEO of Volvo Cars, to prepare a proposal that will be presented to their respective boards. A finalised deal would not only require the approvals of the respective boards and shareholders, but also be subject to regulatory approvals and prevailing market conditions.

A combined company would have access to the global capital market through Hong Kong and with the intention to be subsequently publicly listed in Stockholm as well. The latter has been an ambition for Volvo in the past, although this has been put off indefinitely due to trade tensions – most notably the United States-China trade war – and slump in automotive stocks globally.

It isn’t known how the leadership of the new entity would be formed, but both automakers are adamant that the distinct identity of each of the brands – Geely Auto, Volvo, Lynk & Co and Polestar – would be preserved despite the combination.

Volvo’s partnership with Geely has been a successful one ever since ZGH acquired the Swedish carmaker from Ford in 2010. Aside from rising sales figures, both have benefitted from considerable shared technologies, including the Compact Modular Architecture (CMA) and Scalable Product Architecture (SPA) platforms.

This synergy was further strengthened in October last year, as Volvo and ZGH announced plans to merge their existing internal combustion engine (ICE) operations into a standalone business. The new outfit will be responsible for the development of next-generation combustion engines and hybrid powertrains for ZGH brands, including Geely Auto, Proton, Lotus, London Electric Vehicle Company, Lynk & Co, as well as interested third parties.

“A combination of the two companies would result in a strong global group. We look forward to working with Hakan Samuelsson, president and CEO of Volvo Cars, to further investigate this opportunity with the goal to strengthen the synergies within the group while maintaining the competitive advantage and the integrity of each individual brand,” said Li Shufu, chairman of ZGH.