Volvo CE has signed a contract to sell its 70% stake in Shandong Lingong Construction Machinery Co (SLCM) to the Lingong Group.
Volvo has decided to target focused customer segments in China instead and rely on a broader range of Chinese suppliers than SLCM.
Volvo acquired a majority stake in SDLG In 2006 to gain access to Chinese construction equipment market.
Volvo Group will sell its shares in SDLG for 8bn Swedish Krona (about £600m).
Melker Jernberg, head of Volvo CE, said: “SDLG has served us well since 2006. However, with increasing competition, and the need to transform to new technologies as well as strengthen interaction with customers, we need to re-focus. China remains an important market for us, and we aim to capitalise on our opportunities by focusing on sustainable solutions in targeted segments. We also plan to leverage the excellent industrial system in China.”
On the other side of the world, Volvo is buying Swecon, a £750m-a-year equipment dealer with operations in Sweden, Germany and the Baltics.
The acquisition includes Swecon’s entire business scope in these markets, including sales of products and services, aftermarket services & support to customers as well as offices, workshop facilities and 1,400 employees.
The acquisition also brings Volvo into competition with some of its customers as Swecon also operates a rental business.
This acquisition will mean Volvo CE will own and manage the majority of the company´s business in Europe, making retail core for the manufacturer in Europe.
This represents another strategy shift for Volvo. In 2017 it sold its British dealership to SMT, its dealer for Benelux and 18 African countries. The company described the sale at the time as part of “the general transformation program that is improving the long-term competitiveness of Volvo CE”.
Today Volvo CE’s Europe sales chief Carl Slotte says: “Owning and managing most of our retail operations in Europe provides us a competitive advantage to better meet the rapidly changing demands of our customers and drive new business models, while bringing in valuable competence from Swecon.”
The Swecon acquisition is subject to regulatory approval and closing of the deal is anticipated in the second half of 2025.
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