Just when we thought Volvo Group was positioning itself to buy Isuzu, the Swedish global truck and bus maker has stunned the industry  by forking out just over $AUD175million to buy the heavy truck making operations of Chinese auto maker JMC (Jiangling Motor Corporation).

AB Volvo revealed this week that it had struck the deal to  buy the heavy duty truck subsidiary of JMC, to give the Swede a manufacturing base in the world’s largest vehicle market enabling it to make trucks in China to not only give it entree to the Chinese market but also to other emerging markets through Asia with a lower cost production base.

The JMC acquisition includes a manufacturing site in China’s northern city of Taiyuan. Volvo said it aims to start production of its new heavy duty Volvo FH, Volvo FM and FMX trucks at the Chinese facility by the end of 2022.

Volvo says that within a few years the plant will have a planned annual production capacity of 15,000 trucks per annum, with the potential to increase capacity further.

The Company said  that the Volvo Truck brand has been active in China since 1934 adding that in 2020, more than 4,500 heavy-duty Volvo trucks  were imported and sold in China.  Volvo said that expanding its business operation in China  was in line with its long-term  strategy .

“We are committed to shaping the future of sustainable transport solutions, said Volvo Trucks president, Roger Alm.

“With our long-standing presence in China, we are growing our sales, and we are expanding our strong network of sales and service points together with our private dealer partners,” he said.

“Over the last couple of years, we have seen a fast development of the logistics markets and an increasing demand for our premium trucks and services and to meet the demand from Chinese transport operators, the time is right for us to establish a regional value chain with our own heavy-duty truck manufacturing in China,” he concluded

The operations in Taiyuan will include stamping, welding, manufacturing of cabs, painting and the final assembly of Volvo trucks. After investment, within a few years, the plant will have the capacity to produce 15,000 Volvo trucks per year with the potential to increase the capacity further.

Chinese car maker Geely, which purchased the Volvo Car operation from Ford in 2010, is a shareholder in JMC and also in AB Volvo. Geely’s focus however is on the light vehicle operations where JMC makes Ford sourced vans, utes and  SUVs.

JMC did flirt with operations in Australia for a short time, opening an office in Sydney’s inner west based in a car sales yard on Parramatta Rd and sold a small number of JMC Utes, based on an older Ford Courier/Ranger model

Perhaps it is coincidence that Volvo has bought the Chinese brand  or perhaps it may be because of the fact that  Geely is also on the JMC share register along with Ford . The cross pollination in the automotive industry is making for a very complex and convoluted web that reveals a lot of strange bedfellows and unlikely alliances.

With the Chinese economy still on the rise  it is seen by global truck makers as an essential place to be. China’s booming e-commerce has driven a massive boom in transport logistics in the world’s most populous country and  major truck makers are planning truck production there to meet demand as Chinese authorities introduce increasingly tough safety and emission regulations the local truck makers will struggle to easily meet.

Volvo’s move follows Swedish rival Scania, one of VW Traton’s truck brands, and its moves in building its own production facility in China, while Daimler has established a joint venture with Foton which will see  the Mercedes Benz Actros built outside Beijing

While Volvo has bought a foothold in China, a move to buy Isuzu in the future could not be ruled out.  The purchase price for the JMC truck operation was only around five per cent of  the price it got for selling UD to Isuzu in 2019, meaning  the Swede is still cashed up and capable of  another significant corporate play.