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Volvo acquires 45% of Chinese vehicle maker Dongfeng
[STOCKHOLM] Swedish truck maker Volvo Group said Monday it had completed the acquisition of 45 per cent of a subsidiary to Chinese motor giant Dongfeng for US$893 million (S$1.2 billion).
Announced in January 2013, and now confirmed by Beijing, the deal awards Volvo a share in Dongfeng Commercial Vehicles (DFCV) worth 5.5 billion yuan.
The other 55 per cent remains in the hands of the parent company, Dongfeng Motor Group, one of the main shareholders of the French carmaker PSA.
"This strategic alliance is a real milestone and entails a fundamental change in the Volvo Group's opportunities in the Chinese truck market, which is the largest in the world," Volvo wrote in a statement.
Dongfeng controls between 15 and 18 per cent of the truck market in China.
The partnership confirms Volvo's ambition to overtake Germany's Daimler as the largest truck manufacturer in the world.
"Volvo's ownership in DFCV is expected to be recognised as an associated company and will be consolidated as of January 2015" in the company's accounts, the statement said.
The automaker Volvo Car, which since 1999 no longer belongs to Volvo Group, has also turned toward the Chinese market since its acquisition in 2010 by Geely, a group whose car models are unknown in the West.