Volkswagen buys Volvo’s connected vehicle unit for $122 million

BERLIN/STOCKHOLM (Reuters) – Volkswagen (VW) (VOWG_p.DE) is the purchase of a controlling interest in Volvo’s (VOLVb.ST) WirelessCar, a digital service developer specializing in the connected drive, for 1.1 billion Swedish crowns ($122 million), the companies said on Wednesday.

FILE PHOTO: The logo of Swedish truck maker Volvo is pictured at the IAA truck show in Hanover, September 22, 2016. REUTERS/Fabian Bimmer/File Photo

VW said WirelessCar technology would further the goal of developing value-added services for customers by enabling a safe and stable exchange of data between the systems in the cars and a cloud platform it is developing with Microsoft (MSFT.O).

The German carmaker will buy 75.1% of WirelessCar in the deal, which allows the Volvo to focus on commercial vehicles, its core business since it sold Volvo Cars in 1999.

Volkswagen has said that it wants to invest more than 11 billion euros in electric vehicles, digitisation, autonomous driving and the mobility of services by 2023, with the majority destined for electric cars.

WirelessCar has its own technology, platform and develops digital services, such as billing and security, and emergency repairs of services for customers, including Jaguar Land Rover [TAMOJL.UL], Daimler (DAIGn.DE), Nissan (7201.T) and Volvo Cars [GEELY.UL].

The company has more than 3 million active connected cars around the world and reported a revenue of approximately 500 million kroner in 2018, Volvo said in his statement.

Volkswagen said it will focus on the sales of more than eur 1 billion from 2025 through the WirelessCar’s platform, excluding any sales of vehicles via the digital platform, which will be accessible on mobile phones or on the in-car equipment in some models from April next year.

Volkswagen’s digital store will offer services such as the parking app parking We, the trunk delivery service We deliver the car parts of the services that We do not Share or Moia.

Customers can also book functions on demand, such as a map of data for specific countries or supplemental heating in the winter months, VW said.

The platform for registered Volkswagen customers will also be open to third parties, such as suppliers of music, movies and other infotainment.

The WirelessCar deal must still be approved by the cartel authorities and is expected to close in the first half of the year 2019.

At the conclusion of the sale would result in a positive effect on Volvo’s operating income by about 1.5 billion crowns and the cash flow of 1.1 billion kroner, Volvo said.

Volkswagen has an option to purchase the remaining share in WirelessCar, he said, adding that it can also imagine that keeping Volvo as a shareholder.

Reporting by Tassilo Hummel and Arno Schuetze in Berlin and Esha Vaish in Stockholm; Editing by Edmund Blair and Susan Fenton

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