Joint Venture of Volvo Group and Dongfeng Receives NDRC Approval

www.chinatrucks.com: Swedish automotive manufacturer Volvo Group and Chinese Dongfeng Motor Corporation have received the National Development and Reform Commission (NDRC) approval for the establishment of a joint venture in China. The joint venture is subject to the approval of additional authority approvals. The transaction is expected to take place in mid 2014. The transaction will strengthen Volvo's position in the medium-duty and heavy-duty truck and bus segment.

In January 2013, AB Volvo signed an agreement with Dongfeng Motor Corporation (DFC) to acquire 45% of Dongfeng Commercial Vehicles (DFCV), a new subsidiary of DFC. The transaction will include a major part of DFC's medium- and heavy-duty commercial vehicles business.

In 2002, when DFC joined hands with Nissan Motor to Dongfeng Motor Company Limited (DFL), its commercial vehicle business is packaged to DFL as assets. Before cooperation with Volvo, DFC bought back some heavy-duty commercial vehicle businesses and assets, most of which will be transferred to the new DFCV.

An insider from DFC says DFC holds an absolutely major position. The board of directors is consisted of 7 persons, 4 of which from DFC including the chairman of the board and the general manager, and the rest 3 is from Volvo Group including one vice chairman of the board.

It’s worth noting that Volvo Group enters China as early as 10 years ago through cooperating with China National Heavy Duty Truck Group Co., Ltd (CNHTC). In June 2003, the two sides invested 1.6 billion RMB to establish Jinan Huawo Truck Co., Ltd. which only produced a little more than 200 units of vehicles in 2005 and finally ended up with a halt in early 2006. In 2009, CNHTC and Volvo announced to stop cooperation.

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