Volvo Trucks will acquire JMC Heavy Duty Vehicle — a subsidiary of Jiangling Motors Co. with a manufacturing site in Taiyuan, China — for about $126 million.

Volvo Trucks says the objective is to start production of the new heavy-duty Volvo FH, Volvo FM and Volvo FMX trucks in Taiyuan for customers in China from the end of 2022.

Volvo Trucks has been active in the Chinese market since 1934. During the last couple of years, the growth of logistics services, including e-commerce, has led to a surge in the sales of Volvo trucks in the country, company officials said in a press release. In 2020, more than 4,500 heavy-duty Volvo trucks were imported and delivered to customers in China. In line with the long-term Volvo Group strategy, Volvo Trucks is therefore expanding its business operation in China.

“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. 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,” said Roger Alm, President of Volvo Trucks.

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.

The transaction is subject to customary closing conditions, including regulatory approvals.