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Volvo Truck gets heavy with Dongfeng

28 January 2013 #News #Sales #Top Stories #Truck

Volvo is set to become the world’s largest heavy-duty truck producer after a new strategic alliance with Chinese vehicle manufacturer Dongfeng.

AB Volvo has signed an agreement with Dongfeng Motor Group Company Limited  (DFG) to take over a 45% share of the company’s truck manufacturing branch, Dongfeng Commercial Vehicles (DFCV).

The acquisition of DFG’s medium-and heavy-duty commercial vehicle production will see Volvo Group become the world’s largest heavy-duty truck manufacturer. Completion of the transaction, worth £569m, is expected within the next 12 months, dependant upon the approval of anti-trust agencies and Chinese authorities.

Volvo’s President and CEO, Olof Persson said: ‘This is a very exciting venture that will combine the best of two worlds, strengthening the positions of the Volvo Group and Dongfeng.

‘We are pursuing a clear strategy to achieve our vision of becoming the world leader in sustainable transport solutions.’

The two sides have agreed to cooperate with plans for new engine and powertrain components, product platforms and purchasing.

The DFCV management team will consist of eight members: four from the Volvo Group and four from DFG. The board will include seven members, with three places accounted for by the Volvo group.

DFG is also responsible for appointing the DFCV Managing Director, while the Volvo Group will nominate the company’s Chief Financial Officer.

DFCV is currently the largest medium-and heavy-duty commercial vehicle manufacturer in China, having sold a total of 191,000 units in 2011. The company also employs 28,000 people.