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Another domestic auto giant announced its withdrawal from the heavy truck market!
On August 23, Volvo Trucks (Volvo Lastvagnar Aktiebolag) and Jiangling Motors Co., Ltd. (hereinafter referred to as "Jiangling Motors") officially signed an agreement through an online ceremony. Volvo Trucks acquired Jiangling Heavy Vehicle Co., Ltd. (hereinafter referred to as "Jiangling Heavy Duty Truck") and its production base in Taiyuan.
Ma Jun, President of Volvo (China) Investment Co., Ltd., Dong Chenrui, President of Volvo Trucks China, and Jin Wenhui, First Executive Vice President of Jiangling Motors attended the ceremony and witnessed the signing.
Why did JMC sell its 100% equity interest? Jiangling Motors stated, “The company has formulated and implemented the strategic vision of “becoming a leader in the light commercial vehicle industry and a provider of Ford’s cost-effective products”. One of the measures to achieve the strategic vision. Since the delisting price is close to the assessed value of the equity, the equity transaction has no significant impact on the company’s profits. The specific amount is subject to the audit results. After the completion of the equity transfer, the company no longer owns Jiangling Heavy Truck’s equity will no longer be included in the scope of the company’s consolidated statements."
Official information shows that Jiangling Motors is a powerhouse in the Chinese auto industry with commercial vehicles as its core competitiveness, and it has expanded to SUVs and MPVs. Jiangling Motors took the lead in introducing international advanced technology to manufacture light trucks in China in the mid-1980s and became China's major light truck manufacturer. In November 1993, the company successfully issued A shares on the Shenzhen Stock Exchange and became the first listed company in Jiangxi Province. In 1995, it was the first to introduce foreign strategic partners in China through the issuance of B shares through ADRs. Ford Motor Company of the United States now holds 32% of the company's shares.
This divestiture may be due to the declining operating performance of JMC Heavy Trucks. In 2012, in order to achieve full coverage of commercial vehicle lines, Jiangling Motors spent about 270 million yuan to acquire all the shares of Taiyuan Heavy Duty Truck held by China Ordnance Equipment Group and Changan Automobile, and formally entered the heavy truck market. Subsequently, Taiyuan Heavy Duty Truck was renamed "Jiangling Heavy Duty Truck". steam". Since then, the performance of JMC's heavy-duty trucks has continued to be sluggish. In 2019, JMC has a net loss of 304 million yuan, and the net loss in 2020 will further expand to 520 million yuan. Entering 2021, JMC's performance has not improved significantly, and it is still in a state of loss. In May of this year, Jiangling Motors issued an announcement stating that the company intends to sell 100% of Jiangling Heavy Truck's shares through public listing on the Shanxi Property Rights Exchange at a price of no less than 764 million yuan to divest its heavy truck business. Get rid of the "burden" of heavy trucks, Jiangling Motors is also expected to develop light commercial vehicles wholeheartedly.
On the other hand, after the acquisition of Jiangling Heavy Duty Truck, Volvo Trucks has become the third wholly foreign-owned commercial vehicle company after Hyundai Commercial Vehicle and Scania after the commercial vehicle stock ratio liberalization.
According to data, Volvo Trucks has a long history in China. As early as 1934, the first Volvo truck arrived in Shanghai. In 2020, the total number of trucks delivered by Volvo Trucks hit a record high, with more than 94,000 Volvo trucks being delivered globally. In May of this year, a new generation of Volvo trucks was officially launched in Dunhuang. With the rapid development of China's infrastructure construction and the continuous improvement of logistics efficiency, the high-end truck segment including Volvo Trucks will also enter a new stage of rapid expansion. In the field of new energy and low carbon emissions, Volvo Trucks has also launched a full range of pure electric trucks in multiple markets, and plans to launch fuel cell electric trucks in the next few years.
"Through the acquisition of Jiangling Heavy Duty Truck, which is 100% controlled by Jiangling Motors, Volvo Trucks will establish a wholly-owned Volvo Trucks production base in China to better serve China, the world’s largest truck market. Volvo Trucks’ goal is to start from the end of 2022. Volvo FM, FH and FMX series heavy trucks are produced in Taiyuan for Chinese customers.” Volvo said.
