Volvo Postpones IPO Due To Trade Tensions And Stock Downturn

Volvo and owner Zhejiang Geely Holding Group have postponed a plan to take the Swedish automaker public due to trade tensions and a downturn in automotive stocks.

The carmaker was going to be floated in Stockholm at an estimated value between $16 billion and $30 billion. Volvo says that a listing is possible in the future, but hasn’t provided any kind of timeline.

“We have come to the conclusion that the timing is not optimal for an IPO right now,” Volvo chief executive Hakan Samuelsson said.

Automotive News Europe reports that ongoing trade issues between the United States and China and the U.S. and Europe have “rattled” automotive investors, hurting share prices and adding volatility. Samuelsson added that the prospects of an IPO had also dimmed due to a decline that has seen the Stoxx 600 Autos & Parts index fall by 15 per cent this year.

Geely wants Volvo to make deeper inroads into the Chinese market before reconsidering an IPO, sources close to the issue said. Despite making some progress, Volvo’s Chinese sales of 61,480 vehicles in the first half of 2018 are still well behind Mercedes-Benz, BMW and Audi.

Reports of Volvo’s interest in going public first surfaced in May. At the time, it was reported that the Swedish automaker was eyeing a dual-listing in both Sweden and Hong Kong and had selected Citigroup, Goldman Sachs and Morgan Stanley to advise.

Geely currently owns 99 per cent of Volvo. The remaining 1 per cent is owned by a host of Swedish institutional investors through a distinct class of shares.