Wedoany.com Report-Jun 25, Volvo Construction Equipment (Volvo CE) has agreed to sell its 70% stake in Shandong Lingong Construction Machinery Co (SDLG) to a fund primarily owned by Lingong Group (LGG) for SEK 8 billion ($826 million). The transaction is expected to be finalized in the second half of 2025, subject to regulatory approvals and other conditions.

The deal is set to close in H2 2025.

The sale is projected to increase Volvo CE’s operating income by SEK 1 billion upon completion, though this is subject to currency fluctuations. However, it will also incur a negative tax impact of SEK 1.6 billion, similarly affected by exchange rate changes. The positive effect on operating income will not be included in the adjusted operating income. In 2024, SDLG accounted for about 2% of Volvo Group’s turnover, with minimal impact on the group’s overall operating income.

Volvo CE acquired its majority stake in SDLG in 2006, with LGG as a minority shareholder, to access China’s construction equipment market. Volvo CE stated: “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.”

Following the transaction, Volvo CE will concentrate on providing Volvo-branded products and services tailored to specific customer segments in China, including mining, quarry and aggregates, and heavy infrastructure. The company aims to develop customized solutions to meet customer needs while establishing a sustainable distribution strategy in China’s competitive market.

China will remain a vital hub for Volvo CE’s production and development, serving both domestic and export markets. The company will continue to utilize its excavator manufacturing facility in Shanghai, operational since 2002, and recently introduced new production lines. Volvo CE also plans to strengthen its engagement with China’s supplier ecosystem, reinforcing the country’s role in its global value chain.

The sale reflects Volvo CE’s strategic shift to focus on its core brand offerings while maintaining a strong presence in China’s market through targeted investments and partnerships.