Volvo Cars, which reported an operating loss for the first six months of 2020, says its planned merger with Geely Auto has been temporarily put on hold due to the Chinese company’s plans to list in China. The Swedish automaker said that both companies will resume talks in the autumn, Reuters reports.
The planned merger, aimed at increasing the financial and technological synergies between the two automakers, was first intimated in February. Although the distinct identity of the brands would be maintained, the companies said that the combined entity – which would list in Hong Kong and possibly Stockholm as well as on the stock market in China – would have improved access to the global capital market.
Volvo’s partnership with Geely has been a success ever since Geely Auto’s parent company Zhejiang Geely Holdings (ZGH) acquired the Swedish carmaker from Ford in 2010. Aside from rising sales figures, both carmakers have benefitted from a host of shared technologies, including the Compact Modular Architecture (CMA) and Scalable Product Architecture (SPA) platforms.
As previously reported, the Swedish automaker said that while the Covid-19 outbreak has had a significant impact on its business for the first half of 2020, it expects its business to recover in the second half of the year.
The brand said it saw a return to solid growth in China during the second quarter, and expected a similar upturn in the United States and Europe, its three best performing markets currently. Production has resumed in all its factories except at its Charleston plant in Ridgeville, South Carolina.
In March, the automaker had stated that its sales, earnings and cash flow in the first half of 2020 would decline from a year ago as a result of the pandemic. In April, the company announced cost-cutting plans, stating its intention to make 1,300 white-collar jobs in Sweden redundant. At the time of the exercise, the company had 24,000 staff in Sweden, in addition to around 2,000 consultants.
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