Volvo shares edge lower as car maker announces plans to make Lynk & Co cars

Volvo shares are in the red Monday, as the Swedish car maker announced it would manufacture a new brand of cars at its Belgian facility in Ghent. Lynk & Co is jointly owned by Volvo owner, Geely Holding Group and the two car makers it owns, Volvo and Geely auto.

The news comes as Lynk & Co has begun selling its new brand of cars in China and plans to hit the European market in 2019.

By 1145 BST, Volvo shares were 0.34% lower at SEK147.65. The stock has been moving steadily lower over the past three months after beginning 2018 at SEK152.69.

New car brand

Volvo purchased a 30% stake in Lynk & Co in 2017 and this latest plan highlights its intentions for the brand to be a success when it becomes available to the European market next year.

Geely Auto owns 50% of the brand, while Geely Holdings Group owns the remaining 20% of the car new car maker.

“We see a big potential for this new brand entering the European market and we are happy to give Lynk & Co the support of Volvo’s technological and industrial expertise,” said Håkan Samuelsson, president and CEO of Volvo Cars.

Volvo decision will help lower costs

By agreeing to manufacture Lynk & Co cars at one of its European facilities, the move will also have a “positive effect on cost levels, employment and production volumes at the Ghent plant,” Volvo said.

“Lynk & Co’s decision to pick Ghent for their European production demonstrates the high levels of quality control that underpin Volvo’s global manufacturing strategy,” said Volvo Cars senior vice president for manufacturing and logistics, Javier Varela.

The diversification of Volvo’s manufacturing capacity comes as the business is developing new vehicle product lines, as well as other avenues of potential future revenue streams.

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