If a marriage is the union of two persons, then a merger is the equivalent in the corporate world.
Well, it seems that there is a new engagement in the automotive industry, this time from Volvo... and Geely.
Chinese automotive powerhouse Geely has just announced that they are in the middle of discussions to merge with Volvo. If the talks come to fruition, that would mean the creation of a new automotive powerhouse between the two brands, along with their sub-brands such as Lynk & Co and Polestar.
The new combined business will be listed in the stock exchanges of Hong Kong and Stockholm.
The announcement is interesting because much of the industry are undoubtedly wondering why it didn't happen sooner. Li Shufu's Geely already owns Volvo, and has been the parent since 2010 when they completed the buyout from Ford.
The Blue Oval had owned Volvo as part of the now-defunct Premier Automotive Group; Ford's portfolio of premium brands that included Aston Martin, Lincoln, Jaguar, Land Rover, and Volvo. Except for Lincoln, all the PAG brands have found new owners.
We imagine that the the new company will function in a manner similar to other major automotive groups and alliances by sharing development costs, manufacturing facilities, engines, platforms, parts suppliers, logistics costs, manpower, and more in order to operate with a stronger, more efficient back end with greater economies of scale. Customer-facing or frontline aspects of the automotive business such as dealerships, branding, and design will likely be unaffected.
While Geely and Volvo haven't stated any particulars or numbers involved in the merger, in terms of vehicles sold, we can state that it will be a major player worldwide, especially since both are growing brands.
In 2009, before Geely fully acquired Volvo, the Swedish carmaker that specialized in safety sold just over 334,000 vehicles. In 2019 and with sales driven by new SUV models, Volvo sold over 705,000 units.
Combined with Geely which sold 1.36 million units in 2019, that means the new marriage would account for over 2 million units worldwide per year, and growing.
The announcement also comes just a few months after Fiat Chrysler Automobiles (itself a merger of the Italian and American automotive giants) officially announced a merger with PSA, the company behind Peugeot and Citroen.