Volvo CE sold its 70% of China's SDLG for SEK 8B to refocus on premium segments

In 2006 Volvo Construction Equipment bought a majority of SDLG — Shandong Lingong Construction Machinery — with Lingong Group as minority holder, and the value-brand joint venture did its job: it gave Volvo access to China's domestic construction equipment market through a brand priced for it. By 2024 SDLG contributed roughly 2% of Volvo Group turnover with an insignificant impact on operating income, and both partners concluded they would be better off pursuing independent strategies.

In June 2025 Volvo CE signed a contract to sell its entire 70% stake to a fund predominantly owned by LGG for SEK 8 billion (RMB 6 billion). The transaction was expected to add about SEK 1 billion to the Construction Equipment segment's operating income at closing — excluded from adjusted operating income — against an expected negative tax impact of SEK 1.6 billion, with closing set for the second half of 2025 pending regulatory approvals.

The exit is a refocus, not a retreat. Volvo CE said it will sell Volvo-branded premium products and services to targeted segments — mining, quarry and aggregates, heavy infrastructure — while keeping its Chinese operations as a globally competitive production and development center serving domestic and export markets. It has run an excavator plant in Shanghai since 2002 and recently announced new production lines, and it plans to lean on China's supplier ecosystem for quality and cost advantages.

SEK 8B (RMB 6B) for the 70% stake and +SEK 1B operating income at closing; SDLG had been ~2% of Volvo Group turnover at insignificant margin.

Competition in China's value segment intensified just as the industry's technology transition demanded investment, making a two-brand fight unwinnable for Volvo.

SDLG's economics — about 2% of group turnover and insignificant operating income — no longer justified the capital and management attention.

Keeping the Shanghai plant and supplier network preserves the cost and capability benefits the 2006 acquisition was meant to buy, without the brand.

Selling to a fund predominantly owned by LGG kept the business with the partner that knew it, simplifying regulatory and operational transition.

A market-entry acquisition has a shelf life: when the local brand stops differentiating, keep the factory network and go premium instead of defending both brands.

Closing was expected in the second half of 2025, subject to regulatory approvals, with the SEK 1 billion gain booked at closing and excluded from adjusted operating income. Volvo CE committed to premium-segment growth in China and to expanding its Chinese production footprint, with head of Volvo CE Melker Jernberg framing SDLG's exit as the price of focusing on 'sustainable solutions in targeted segments.'