Following the news that Volvo Car and Geely Automobile Holdings are considering a merger;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“The proposed deal continues an ongoing theme of more merger and acquisition (M&A) activity in the auto industry, as companies position to be more competitive in the face of considerable business challenges ahead – most notably to invest in costly advanced technologies such as electrification and automated drive, while also meeting tighter CO2 emissions targets.

“Although Volvo Cars is owned by the Zhejiang Geely Holding Group (Geely Automobile Holdings’ parent) and there is already considerable engineering cooperation between Geely Auto and Volvo, the move would bring the two automotive businesses even closer together.

“The combination would bring the opportunity to have greater scale economies in areas such as parts procurement and accelerate technology sharing across the Volvo, Geely, Lynk & Co and Polestar brands.

“A combined company would have access to the global capital market through a Hong Kong listing and possibly Stockholm’s stock market later on, a move that could bring more capital for investment in costly advanced technologies.”