VOLVO Cars has agreed to take control of its China ventures from parent Geely Automobile Holdings Ltd., potentially boosting its valuation ahead of a planned share sale.

The deal will make Volvo Cars the first major foreign automaker to gain full control over its Chinese operations, the Swedish company’s CEO Hakan Samuelsson said in a statement Wednesday.

The companies declined to comment on terms of the deal.

Next year, China is set to remove the 50 percent cap on foreign automakers’ investments in joint ventures that make gasoline-powered cars, after lifting the limit for electric-vehicle manufacturers in 2018.

Tesla Inc. was the first non-Chinese carmaker to set up a wholly owned venture in the world’s biggest car market.

Under the agreement, Volvo will buy an additional 50 percent of shares in Daqing Volvo Car Manufacturing Co. and Shanghai Volvo Car Research and Development Co. The transaction will be completed in two steps, starting in 2022 when the joint-venture cap is lifted, and is expected to be formally completed in 2023.

“These two transactions will create a clearer ownership structure within both Volvo Cars and Geely Holding,” Geely’s CEO Daniel Li said in a statement, which did not refer to the possible IPO.

Volvo Cars sold more than 166,000 vehicles in China last year, and its dealers are offering heavy discounts to compete with other premium brands like BMW and Audi.

German automakers BMW AG and Volkswagen AG have moved already to acquire bigger stakes in their joint ventures after China announced plans to lift share limits.

(SD-Agencies)