The Swedish automaker Volvo Cars and the Chinese group Geely Automobile announced Monday their intention to start talks to study a possible merger and create a new publicly traded company.
Geely, one of the leading car manufacturers in China, controls the Swedish firm since in 2010 it was bought from the US multinational Ford.
“Volvo Cars and Geely Automobile are considering combining their businesses to create a strong global group, which would accelerate financial and technological synergies between the two companies,” the Swedish firm said in a joint statement.
The resulting new company would maintain the identity of each of its brands: Volvo, Geely, Polestar (high performance electric vehicles) and the joint subsidiary Lynk & Co.
Access to global capital markets would be through the Hong Kong Stock Exchange, although the plan is to also quote in Stockholm, according to the statement.
Volvo Cars and Geely will create a joint working group to prepare a proposal for their respective boards of directors.
The Swedish group Volvo, created in 1927, sold its car division in 1999 to Ford after two failed merger attempts with the Swedish Scania and the French Renault, while retaining the production of buses, trucks and aeronautical equipment.
Ford put Volvo Cars on sale a decade later, within the process of eliminating group brands not considered central, and this was acquired by Geely.
In 2019, Volvo Cars achieved a net profit of 9,603 million Swedish kronor (909 million euros), 1.8% less than the previous year, due to price competition in several markets and the decrease in the sale of licenses, which had an impact on revenue.
The Swedish brand sold 705,452 units last year in 2019, up 10%, surpassing for the first time the barrier of 700,000 cars sold in a year.