Volvo CE refocus their presence in China and Europe
Company divests its shares in SDLG and announces major investment in European retail business
VOLVO Construction Equipment (Volvo CE) have signed a contract to sell their ownership in China-based SDLG (Shandong Lingong Construction Machinery Co) to a fund predominantly owned by the Lingong Group (LGG). Going forward, Volvo CE will be targeting focused customer segments in China and enhance their utilization of the Chinese supplier ecosystem.
This means Volvo CE will:
Sell their entire stake of 70% of the shares in SDLG to a fund predominantly owned by the SDLG minority owner LGG
Focus on offering Volvo-branded premium products and services to focused customer segments in China
Utilize their system in China as a production centre serving both the domestic and export markets
Continue to strengthen the Jinan Technology Centre (JTC) into the Global Technology System to maximize the product development opportunities in China for the rest of the world.
In 2006, Volvo CE acquired a majority stake in SDLG, with LGG as a minority shareholder. The strategic investment gave Volvo CE access to the important domestic Chinese construction equipment market. The SDLG collaboration has been successful, but for strategic reasons, Volvo and LGG now believe it would be mutually beneficial to pursue independent business strategies. Therefore, the parties have agreed that a fund predominantly owned by the LGG will take ownership of Volvo’s SDLG shares.
Melker Jernberg, head of Volvo CE, said: ‘SDLG have served us well since 2006. However, with increasing competition, and the need to transform to new technologies as well as strengthen interaction with customers, we need to refocus. China remains an important market for us, and we aim to capitalize on our opportunities by focusing on sustainable solutions in targeted segments. We also plan to leverage the excellent industrial system in China.’
Volvo CE will maintain their strategic focus on leading the development of sustainable solutions in the Chinese construction industry, targeting key segments such as mining, quarrying, aggregates, and heavy infrastructure. The emphasis will be on providing tailored and comprehensive solutions that address specific customer needs while developing a sustainable distribution roadmap suited to the highly competitive landscape.
The operations in China serve as a globally competitive production centre, catering to both domestic and export markets. To leverage the quality and cost advantages present in the competitive industrial environment, Volvo CE have operated an excavator production facility in Shanghai since 2002 and have recently announced the establishment of new production lines. Moving forward, China will remain a crucial component of the company’s value chain and a base for numerous suppliers, both domestic and international.
A key component of Volvo CE China strategy is to continue to strengthen the Jinan Technology Centre (JTC) into the extensive Global Technology System of Volvo CE, which aims to foster innovation and collaboration on a global scale. This involves ownership of products and establishing a common architecture to be utilized worldwide. Volvo CE say they remain dedicated to innovation and collaboration globally, ensuring that their solutions not only meet the needs of today, but also pave the way for a sustainable future.
Volvo Group will sell its shares in SDLG for SEK8 billion. Closing is expected to occur in the second half of 2025, subject to regulatory approvals and other conditions.
Meanwhile, Volvo CE have come to an agreement with Lantmännen to acquire Swecon (including Entrack), who have operations in Sweden, Germany, and the Baltics.
Volvo CE see this as a strategic move to further invest in retail operations in key markets: Germany, which is Europe’s largest construction equipment market; Sweden, Volvo CE ́s home market; as well as Estonia, Latvia, and Lithuania. In addition to the currently owned retail operations footprint, this acquisition will mean Volvo CE will own and manage the majority of the company ́s business in Europe, making retail core for Volvo CE in Europe.
‘At this time of transformation of our industry where our competitiveness is put to the test, directly collaborating with our customers is even more important to be successful. Through the acquisition of Swecon, we believe we can enhance customer satisfaction,’ said Melker Jernberg.
‘Owning and managing most of our retail operations in Europe provides us with a competitive advantage to better meet the rapidly changing demands of our customers and drive new business models, while bringing in valuable competence from Swecon,’ added Carl Slotte, head of sales Europe at Volvo CE.
The acquisition includes Swecon’s entire business scope in these markets, ie sales of products and services, rental operations, aftermarket services and support to customers, as well as offices, workshop facilities, and 1,400 employees.
‘Over the past 25 years, Swecon have evolved into a profitable and successful part of Lantmännen’s business portfolio. Volvo CE have expressed a strong wish to get closer to the customer, and their initiative to acquire Swecon is testament to the value that has been built within the business. Volvo CE represent a natural new home for the business, offering strong conditions for continued growth and development,’ said Magnus Kagevik, Lantmännen’s group president and chief executive officer.
The acquisition is subject to regulatory approval and closing of the deal is anticipated in the second half of 2025. Lantmännen is an agricultural co-operative with diverse activities in agriculture, energy, food, and machinery. For the full-year 2024 Swecon revenues amounted to SEK10 billion. Entrack, present in Sweden, Italy, Finland, and Poland, are providers of aftermarket products, independently operated within Swecon.
