Volvo Sells 70% Stake in SDLG in Strategic Revamp

Volvo Construction Equipment (Volvo CE) is set to sell its 70% stake in Shandong Lingong Construction Machinery Co (SDLG) as it shifts toward an independent business strategy.

The Swedish OEM acquired a majority stake in China-based SDLG in 2006, with LGG as a minority shareholder, a move that gave it access to China’s construction equipment market.

Volvo CE, one of the world’s biggest OEMs, described the collaboration as “successful” but said that, for strategic reasons, both firms agree it would be in their best interests to part ways.

The company, through SDLG, reportedly struggled to match the pricing of key China-based competitors. Under its new strategy, it will focus on selling Volvo-branded premium products to customers in China and using local operations to serve both domestic and export markets.

In 2024, Volvo CE accounted for 17% of group revenues, while SDLG added 2%.

“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, president of Volvo CE.

He reaffirmed China’s importance as a key market for the company, citing plans to focus on sustainable solutions in key segments and tap into the country’s strong industrial base.

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Notably, Volvo CE has one of the largest electric equipment portfolios in the industry, while China remains the world’s biggest market for electric construction machinery.

The company will sell its shares in SDLG for $837 million, with closing expected before the end of the year, subject to regulatory approvals and other conditions.

Meanwhile, Volvo CE is set to acquire engineering consultancy Swecon’s business operations in Sweden, Germany and the Baltics for $731 million as it looks to refocus on core brands.

Closing of the deal is expected in the second half of 2025. 

“Volvo CE sees this as 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,” the company said in a statement. 

With Swecon under full ownership, Volvo CE will be able to manage most of its European construction equipment business directly, said Bernstein in a statement.

Analysts noted that the SDLG exit underscores the challenges of doing business in China’s weakening construction sector, while the Swecon deal strengthens Volvo’s position in Europe.

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