Volvo CE exits SDLG joint venture in major China strategy reset

Volvo CE’s L120 Electric full-size wheel loader - China is the biggest market in the world for electric construction equipment (Photo: Volvo Construction Equipment)

Volvo CE acquired a majority stake in SDLG in 2006, with LGG as a minority shareholder, which gave the Sweden-based OEM access to the domestic Chinese construction equipment market, one of the world’s largest markets.

In a press release Volvo CE, one of the world’s top ten construction OEMs by sales according to the Yellow Table, said that the collaboration had been “successful” but for “strategic reasons, Volvo and LGG now believe it would be mutually beneficial to pursue independent business strategies.”

It is believed that Volvo CE, through SDLG, was struggling to compete on pricing with some of their major China-based competitors. The new strategy will be to focus on offering Volvo branded premium products and services to focused customer segments in China and utilise its system in China as a production center serving both the domestic and export markets.

“SDLG has 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 re-focus,” said Melker Jernberg, Head of Volvo CE.

“China remains an important market for us, and we aim to capitalise on our opportunities by focusing on sustainable solutions in targeted segments. We also plan to leverage the excellent industrial system in China.”

Volvo CE has one of the largest product portfolios of electric equipment in the industry and China is the world’s largest market for electric construction equipment.

Volvo CE added that a key party of its China strategy is to continue to strengthen the Jinan Technology Center (JTC) into the extensive Global Technology System of Volvo CE, which aims to foster innovation and collaboration on a global scale.

Volvo Group will sell its shares in SDLG for 8 billion SEK (US$837 million). Closing is expected to occur in the second half of 2025, subject to regulatory approvals and other conditions.

Acquisition of Swecon by Volvo CE

The OEM also announced that it has come to an agreement with Lantmännen to acquire the authorised dealer for Volvo Construction Equipment in Sweden, Germany and the Baltics, Swecon. The deal also includes Entrack which is part of Lantmännen’s Swecon business area and produces undercarriage components and ground engaging tools.

The acquisition includes Swecon’s entire business scope in these markets, such as sales of products and services, rental operations, aftermarket services and support to customers as well as offices, workshop facilities and 1,400 employees.

Volvo CE said that this is 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.