Volvo CE Sells 70 Percent of SDLG to LGG-Backed Fund for SEK 8 Billion as It Refocuses on Premium Segments in China

Volvo CE Sells 70 Percent of SDLG to LGG-Backed Fund for SEK 8 Billion as It Refocuses on Premium Segments in China

(IN BRIEF) Volvo CE will sell its 70 percent share in SDLG to an LGG-controlled fund for SEK 8 billion, with closing expected in H2 2025 pending approvals. The deal, recognizing a SEK 1 billion one-time operating income gain (subject to currency), reflects a strategic decision by both parties to pursue independent growth strategies. Post-sale, Volvo CE will pivot to Volvo-branded premium equipment and services in targeted Chinese sectors—mining, aggregates and heavy infrastructure—while leveraging its Shanghai manufacturing and R&D base to serve domestic and export markets. The transaction will also generate a SEK 1.6 billion tax charge, depending on currency movements.

(PRESS RELEASE) GOTHENBURG, 24-Jun-2025 — /EuropaWire/ — Volvo Construction Equipment (Volvo CE) has agreed to divest its 70 percent stake in China’s Shandong Lingong Construction Machinery Co (SDLG) to a fund majority-owned by Lingong Group (LGG) for SEK 8 billion (approximately RMB 6 billion). Subject to regulatory approvals and currency movements, the sale is expected to boost Volvo CE’s operating income by SEK 1 billion upon closing, which is slated for the second half of 2025.

Since acquiring a majority position in SDLG in 2006, Volvo CE has leveraged the joint venture to establish a strong presence in China’s vast construction-equipment market. Although the partnership has delivered meaningful growth, both Volvo CE and LGG have decided that separate strategic paths will better serve their respective ambitions. As part of the agreement, Volvo CE will fully exit SDLG, while LGG’s fund assumes the business, including operations, assets and local workforce.

Looking ahead, Volvo CE will concentrate on delivering Volvo-branded premium machines and aftermarket services to select customer segments within China—particularly mining, quarrying & aggregates and heavy infrastructure. The company will also deepen its integration with the Chinese supplier ecosystem, maintaining its Shanghai excavator plant (in operation since 2002) and recently announced production lines as a dual domestic-export hub.

Melker Jernberg, Head of Volvo CE, commented: “SDLG has been a valuable partner for nearly two decades. As market competition intensifies and new technologies emerge, we must sharpen our focus on high-value segments and sustainable solutions. China remains a cornerstone of our production and development network, and we will continue to harness its industrial strengths.”

The transaction will be recorded as a one-off gain in operating income (excluded from adjusted operating income) and is also forecast to incur a negative tax effect of SEK 1.6 billion, contingent on exchange-rate fluctuations.

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The Volvo Group drives prosperity through transport and infrastructure solutions, offering trucks, buses, construction equipment, power solutions for marine and industrial applications, financing and services that increase our customers’ uptime and productivity. Founded in 1927, the Volvo Group is committed to shaping the future landscape of sustainable transport and infrastructure solutions. The Volvo Group is headquartered in Gothenburg, Sweden, employs more than 100,000 people and serves customers in almost 190 markets. In 2024, net sales amounted to SEK 527 billion (EUR 46 billion). Volvo shares are listed on Nasdaq Stockholm.

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SOURCE: AB Volvo