Geely’s purchase of Volvo deemed “one of the most successful mergers in the auto industry in decades”

Geely’s purchase of Volvo deemed “one of the most successful mergers in the auto industry in decades”

Volvo Cars recently announced that it intends to launch an initial public offering (IPO) and to list its class B shares on Nasdaq Stockholm. A Volvo IPO has been mooted for quite a while now, and if it comes to fruition, it will enable global institutional and retail investors to participate in the next phase of the company’s value creation.

Referring to a report by Global Times, an IPO could value Volvo at USD25 billion, which is significantly more than what it was worth in 2010 when Ford sold the Swedish automaker to Zhejiang Geely Holding Group (Geely) for only USD1.8 billion.

The encouraging valuation estimate is an indicator of Volvo’s successful turnaround plan under Geely, which has seen a slew of new models being introduced to the market as well as increasing sales and revenue figures.

“This is one of the most successful mergers in the auto industry across the world within the recent 10 to 20 years, and there’s no doubt Geely is a good investor,” said Feng Shiming, an analyst with Menutor Consulting.

Geely’s purchase of Volvo deemed “one of the most successful mergers in the auto industry in decades”

In the first half of 2021, Volvo’s retails sales stood at 380,757 units, which was 41% higher compared to the pandemic-affected period in 2020. Meanwhile, revenue increased by 26.3% to 141 billion Swedish krona and operating income returned to the green at SEK13 billion. The latter is a major bounce back of 1,438% after the pandemic pummelled Volvo’s operating income to a loss of SEK989 million in the first half of 2020.

More recently, the company announced its sales performance for the first nine months of 2021, where it sold 530,649 cars, which represents a 17.6% increase compared to the same Covid-hit period in 2020. No financial figures were provided to go along with the 3H 2021 results, but the company says it will keep its outlook for the rest of 2021, although the ongoing semiconductor chip shortage will be an issue for it and many other automakers.

According to Feng, Geely has not only invested strongly – more than USD11 billion – into the then struggling Swedish automaker after acquiring it, but also “fed it back” with technologies so that it could rapidly distinguish itself from other competitors and take a firm foothold in the competitive automotive market.

He added that money raised from the IPO will help Volvo as it continues its electric vehicle offensive, which will see it become a fully electric car company by 2030. “The future of the car industry lies in each individual automaker’s performance in the new energy sector,” Feng ended.

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Gerard Lye

Originating from the corporate world with a background in finance and economics, Gerard’s strong love for cars led him to take the plunge into the automotive media industry. It was only then did he realise that there are more things to a car than just horsepower count.



  • Hope the can increase Proton value too so Malaysian can reap the profit. I mean Malaysian (rakyat) not 1 or 2 elitist.

    Like or Dislike: Thumb up 16 Thumb down 3
    • Proton 51% majority under drb-hicom. Impossible. Plus geely used Volvo expertise and pump money to make all those exciting models, unlike under Ford which forced Volvo to use Ford parts. Geekly now used Volvo parts so its the reverse.

      Like or Dislike: Thumb up 2 Thumb down 3
      • KenZen on Oct 11, 2021 at 11:59 am

        1. DRB-Hicom owns 50.1%, not 51%. So long as Geely has the final say in company direction as they currently do, I’d say it’s possible for them to turn Proton around as what they have already achieved.
        2. Volvo has a very long history in car manufacturing but I wouldn’t call them that much of an expert. Any Volvo owners can tell you about their not so stellar reliability issues. 3 of my contacts used to drive the 850 T5. Very nice car, but I also heard their constant complains about being at the service centre almost on a monthly basis. However, their marketing effort on Safest Car paid off. People are willing to put up with the reliability issues because they think they’re buying the safest car. Although insurance data in the US proves that German cars have better safety record in post accident survivability. Marketing makes a difference.
        3. Volvo Cars was founded in 1927. Proton Holdings in 1983. Geely Auto Group in 1997. And yet, Geely was able to takeover Volvo. Volvo have the experience and knowledge in design and knowhow but Geely probably have better manufacturing, materials and management skills. The Volvo we see today is a result of that combination and it’s proving the same point in Proton.
        4. There is a reason why top Marketing Executives are paid so much. They know what the market wants and that makes the difference in whether the end product will sell or not. Who cares if the car uses parts from Geely even if they are more modern and reliable? Everybody who has not owned a Volvo would imagine that Volvo parts are better. It’s the “safest car in world” after all. The very same reason why Tuned by Lotus is such an important marketing tool. Lotus is widely considered to only be second to Porsche in suspension expertise. Just test drive a Cayman and you’ll understand what I mean.

        Like or Dislike: Thumb up 2 Thumb down 0
  • donno on Oct 07, 2021 at 11:25 am

    geely buy of volvo got it instant customer trust with safety and high class Scandinavian minimalist design.

    geely buy of proton got it instant customer trust of a local brand, instead of being a car sold by an unknown chinese car manufacturer.

    Like or Dislike: Thumb up 11 Thumb down 14
  • suomynona on Oct 07, 2021 at 11:39 am

    Global Times is an official state mouthpiece. They will never report anything negative, so keep that in mind

    Like or Dislike: Thumb up 5 Thumb down 19
    • Xervexc Zymycur on Oct 07, 2021 at 2:28 pm

      The Global Times only reported the potential IPO figure, not the whole report on Volvo. If you do not think that Geely has done some good things for Volvo (and vice versa), please state the actual details and not just your bias against a Chinese company. A typical attitude clouded by reading too much western (biased) medias. The results of Volvo just show everything or do you think the results are fake?

      Like or Dislike: Thumb up 20 Thumb down 4
      • Hello Comrade on Oct 07, 2021 at 10:06 pm

        What is this talk of being clouded by Western influence? Proof of the best Western influence in the Motherland is the Karl Marx & Friedrich Engels monument at Fuxing Park in Shanghai.

        Like or Dislike: Thumb up 3 Thumb down 2
        • Calvin on Oct 08, 2021 at 12:30 am

          China has long ago abandoned Marxism or Leninism or even Maoism, but going for the middle ground with capitalist socialism.

          Like or Dislike: Thumb up 9 Thumb down 1
          • For the Motherland on Oct 08, 2021 at 10:49 am

            The ‘old’ ideology has never been abandoned but kept in reserve as it was not removed from the party’s name. Marx, Lenin & of course Mao remain revered in the party’s history. Capitalist socialism? That’s like in the same vein as religious atheism.

            Like or Dislike: Thumb up 2 Thumb down 4
          • If they were still following old ideology, it wouldn’t be 2nd biggest economy in the world poised to be the biggest sooner than later. The old ideology is long buried, hail the new China moving forward!

            Like or Dislike: Thumb up 1 Thumb down 1
        • Xervexc Zymycur on Oct 08, 2021 at 6:06 am

          @ Hello Comrade … I am talking about biased western medias, not western influence. Understand the difference between the two?

          Like or Dislike: Thumb up 5 Thumb down 0
          • Influence being a state of mind on Oct 08, 2021 at 10:55 am

            How does Western influence propagate if not for the media? Even party propaganda needs the media to cast its influence.

            Like or Dislike: Thumb up 0 Thumb down 1
          • Xervexc Zymycur on Oct 09, 2021 at 12:41 am

            Your comment is off-topic. My main point is on biased medias, not influence. Go figure.

            Like or Dislike: Thumb up 2 Thumb down 1
    • Calvin on Oct 08, 2021 at 12:35 am

      Irregardless. Do you think Volvo as of today would worth more than USD $1.8billion?
      Irregardless whether it is 25Billion or 2.5Billion, the value of this company has far risen above its sold value since then.

      Like or Dislike: Thumb up 6 Thumb down 0
  • Lee Yee Kean on Oct 07, 2021 at 2:03 pm

    Unknown Chinese car maker, are you sleeping or living in the jungle.

    Like or Dislike: Thumb up 4 Thumb down 6

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