Come 2022, China will officially scrap ownership limits on foreign automakers and the joint-venture agreements with local Chinese companies that those limits require.
Volvo announced on Wednesday that it will take advantage of the rule change by buying out its various Chinese joint ventures. The joint ventures cover plants and sales operations, and in each case the other owner is Geely, Volvo's parent company.
The transaction is expected to be completed in 2023 and will make Volvo the first foreign automaker with full ownership of its Chinese operations. Other automakers reported to be planning similar moves include BMW Group and Volkswagen Group.
Volvo said there will be no job losses caused by the move. The automaker also said no financial details will be disclosed.
The move will increase Volvo’s exposure to the Chinese market, the world's biggest for new cars, and will have a positive impact on its net income and equity—something important for any initial public offering made by the Swedish automaker. Volvo said earlier this year that it is considering an IPO.
Volvo sold 166,617 cars in China in 2020, representing about 25% of its total sales. Things will be much better in 2021, with Volvo's sales in China for the first half of the year up almost 45% on the same period a year ago, and up 40% on the same period in 2019.