On January 10, local time, Geely Sweden spokesman Stefan Lundin confirmed that Geely Holding sold Volvo Group shares worth more than 7 billion Swedish kronor (about 685 million US dollars), reducing its shareholding from 8.2% to 6.8%, still its second largest shareholder. This is the first time that Geely has reduced its stake in Volvo Group since it became a shareholder in 2017.
Coincidentally. Geely Holding reduced its stake in Volvo Cars in November last year, selling about 100 million Volvo Cars shares at one time, for a total of about $350 million. This directly caused Volvo Cars' stock price to close down 11.14% on the day, with the largest decline of 14%.
Geely's acquisition of Volvo was once seen as a classic case – in 2010, Geely Holding Group acquired Volvo Cars from Ford Motor Companies, and in 2017, Geely Holding acquired 88.47 million A shares and 78.77 million B shares of AB Volvo from European fund firm Cevian Capital, accounting for 8.2% of the shares. In the process, Geely had a good opportunity to upgrade its technology and brand, and its globalization process accelerated, while Volvo relied on capital to quickly boost its operations in the Chinese market. Now the two rounds of reductions and up to $1 billion are the "seven-year itch" or "excessive speculation"?
Although spokesman Lundin stressed that "Geely's strategic long-term investment in Volvo has not changed" and Geely Holding claimed that it "will release a small number of shares as planned", its statement revealed the flow of some of the funds: it will be used to support the development of the company's brands.
Source: Geely's official website
The author found that the huge "automobile empire" created by Li Shufu, chairman of Geely Holding Group, is surrounded by various brands such as Geely, Lynk & Co, Proton, smart, Zeekr, Lotus, Volvo, Polestar, Long-range, LEVC, radar, and Galaxy, and Geely has become one of the largest automobile groups in China. But not all of them are profitable, not to mention that more than half of the brands are in the highly tilted new energy vehicle track.
According to the IPO (initial public offering) prospectus submitted by ZEEKR to the Securities and Exchange Commission (SEC): from 2020 to 2022 and in the first half of 2023, ZEEKR achieved revenue of about 3.185 billion yuan, 6.528 billion yuan, 31.899 billion yuan and 21.27 billion yuan respectively, and net profit of 104 million yuan, -4.514 billion yuan, -7.655 billion yuan and -3.871 billion yuan respectively in the same period. As of the end of June 2023, ZEEKR cash, cash equivalents and restricted cash totaled 3.26 billion yuan. According to its cumulative net loss of 16.04 billion yuan in the past two and a half years, the money is not enough to burn!
What's more serious is that Geely Holding's "tearing down the west wall" to supplement the development of its sub-brand is at the same time as Volvo's comprehensive electrification strategy. A few years ago, Volvo set a target of 1.2 million units (50% electric) to sell globally by 2025, but progress has been slow, and the production of its EX90, which is based on an all-electric platform, has been repeatedly delayed. In addition, Lynk & Co (a joint venture between Volvo Cars, Geely Automobile and Geely Holding Group) unveiled the high-end pure electric concept car Lynk & Co ZERO in 2020 and revealed that it will be mass-produced and launched the following year. But in March 2021, with the establishment of ZEEKR, Lynk & Co ZERO was replaced by ZEEKR 001. The rest of the story is very familiar, ZEEKR has become an important force under Geely Holding Group, with a valuation of $13 billion after several rounds of financing, and plans to go public in the United States.
But objectively speaking, both sides also want to "live a good life". In February 2020, Geely Automobile and Volvo Cars announced that they were planning a restructuring, and after the reorganization, Volvo Cars' assets will be incorporated into Geely Automobile's Hong Kong listed company and consider listing in Sweden. Five months later, Volvo Cars said that due to Geely's plan to list on the A-share Science and Technology Innovation Board, the merger plan between the two has been temporarily shelved and plans to resume merger negotiations in the autumn. In February 2021, the two companies announced that they had reached the best merger plan - "while maintaining their existing independent company structures and achieving their strategic goals, they will continue to expand the scope of cooperation and deepen cooperation in the new four modernizations of automobiles." "Talking about merger, behind it are differences, and the full embrace of the two sides has come to an end.
On the issue of personnel, there is also a "game of power". On August 18, 2023, Volvo Cars announced that Qin Peiji, President of the Greater China Sales Company, is looking for external development, and his successor is Martin Persson, the current General Manager of Japan. Three days later, Yang Xueliang, senior vice president of Geely Holding Group, posted two Weibo posts in succession, saying that Qin Peiji will be appointed deputy general manager of Geely Automobile Group Sales Company, and highly praised him: "Qin Peiji has served Volvo Cars for 12 years and has made important contributions to the rapid development of Volvo Cars in the Chinese market. ”
Source: Sina Weibo
The two sides are divided on Qin Peiji's whereabouts, and the bigger difference is that Pan Hesong's reporting object has been changed from "Volvo Chief Commercial Officer An Boyan" announced by Volvo Cars to "Yuan Xiaolin, Senior Vice President, President and CEO of Volvo Car Group for Asia Pacific". There is speculation that Geely intends to regain control of Volvo Cars in Greater China.
Looking back seven years ago, the "marriage" between Geely and Volvo can be described as a perfect match, and it is a typical merger and acquisition that uses the resources of both parties to achieve self-improvement. At that time, Chinese automakers were running wild on the road to building their own brands, and Volvo's "safety" concept and internal combustion engine technology brought a spring breeze to Geely. However, with the sudden rise of new energy vehicles, Volvo is under high pressure, Geely is looking for another way out, how the two sides put limited resources into the common cause, obviously testing each other's business wisdom.