Volvo Construction Equipment is acquiring Swecon in a major investment in its European retail business. At the same time, the firm is selling its stake in Chinese company SDLG.
Volvo CE came to an agreement with Lantmännen to acquire Swecon, which has operations in Sweden, Germany and the Baltics including Entrack.
Meanwhile, Volvo CE has signed a contract to sell its ownership in China-based SDLG (Shandong Lingong Construction Machinery Co) to a fund predominantly owned by the Lingong Group (LGG). The SDLG business supplies excavators and wheeled loaders bearing the SDLG brand for sale in China and emerging markets, with the machines featuring technology from Volvo CE. Going forward Volvo CE will target focused customer segments in China and boost its use of the Chinese supplier ecosystem.
Volvo CE says that this is a strategic move to further invest in retail operations in key markets. Germany, is Europe’s largest construction equipment market, while the move includes 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.
“At this time of transformation of our industry where our competitiveness is put to the test, directly collaborating with our customers is even more important to be successful. Through the acquisition of Swecon, we believe we can enhance customer satisfaction,” says Melker Jernberg, head of Volvo CE.
“Owning and managing most of our retail operations in Europe provides us a competitive advantage to better meet the rapidly changing demands of our customers and drive new business models, while bringing in valuable competence from Swecon,” added Carl Slotte, head of sales Europe at Volvo CE.
”Over the past 25 years, Swecon has evolved into a profitable and successful part of Lantmännen’s business portfolio. Volvo CE has expressed a strong wish to get closer to the customer, and their initiative to acquire Swecon is testament to the value that has been built within the business. Volvo CE represents a natural new home for the business, offering strong conditions for continued growth and development,” said Magnus Kagevik, Lantmännen’s group president and CEO.
The acquisition is subject to regulatory approval and closing of the deal is anticipated in the second half of 2025. This move follows Volvo CE's recent announcement that it plans to boost production of hydraulic excavators at its facilities in South Korea, Sweden and the US.
Lantmännen is an agricultural cooperative with diverse activities in agriculture, energy, food and machinery. For the full year of 2024 Swecon revenues amounted to 10 billion SEK. Entrack, present in Sweden, Italy, Finland and Poland, is a provider of aftermarket products, independently operated within Swecon.
Meanwhile, Volvo CE’s agreement will see the firm selling its entire stake of 70% of the shares in SDLG to a fund predominantly owned by the SDLG minority owner LGG. Following this, Volvo CE will focus on offering Volvo branded premium products and services to focused customer segments in China. The firm will use its system in China as a production centre serving both the domestic and export markets. It will also continue to strengthen the Jinan Technology Center (JTC) into the Global Technology System to maximise product development opportunities in China for the rest of the world.
In 2006, Volvo CE acquired a majority stake in SDLG, with LGG as a minority shareholder. The investment gave Volvo CE access to the important domestic Chinese construction equipment market. The SDLG collaboration has been successful, but for strategic reasons, Volvo CE and LGG now believe it is beneficial to pursue independent business strategies. The parties have agreed that a fund predominantly owned by the LGG will take ownership of Volvo’s SDLG shares.
Melker Jernberg, Head of Volvo CE, says: “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. 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 will maintain its strategic focus on leading the development of sustainable solutions in the Chinese construction industry, targeting key segments such as mining, quarry and aggregates, and heavy infrastructure. The emphasis will be on providing tailored and comprehensive solutions that address specific customer needs while developing a sustainable distribution roadmap suited to the highly competitive landscape.
The operations in China serve as a globally competitive production center, catering to both domestic and export markets. To leverage the quality and cost advantages present in the competitive industrial environment, Volvo CE has operated an excavator production facility in Shanghai since 2002 and has recently announced the establishment of new production lines. Moving forward, China will remain a crucial component of our value chain and a base for numerous suppliers, both domestic and international.
A key component of Volvo CE 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. This involves ownership of products and establishing a common architecture to be used worldwide. Volvo CE remains dedicated to innovation and collaboration globally, ensuring that our solutions not only meet the needs of today, but also pave the way for a sustainable future.
Volvo Group will sell its shares in SDLG for 8 billion SEK. Closing is expected to occur in the second half of 2025, subject to regulatory approvals and other conditions.
