Volvo IPO put on hold due to trade war concerns

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A plan to turn Volvo Cars into a publicly traded company by the end of the year has been put on hold due to concerns the stock price could be hurt by the escalating trade war primarily between the United States and China but also between the U.S. and Europe, the reported Sunday.

“It’s important to know that we have headroom, so we can look the investors in the eye a year after the IPO,” Volvo CEO Håkan Samuelsson told the publication, adding that “conditions right now are not optimal to give certain upside for the investors.”

He said an IPO at a later date was still a “very realistic option” and that it was difficult to predict future plans given the potential for new tariffs. The Trump administration recently announced the threat of new tariffs on up to $200 billion of Chinese-made goods entering the U.S.

Volvo’s original plan was to launch the initial public offering on the main stock exchange of Sweden in an attempt to lure the country’s pension funds, with some estimating the market value of the automaker at $30 billion.

Håkan Samuelsson

Volvo is owned by Chinese auto giant Zhejiang Geely and produces a number of its models in China, some of which are sold in the U.S. The automaker also has plants in Europe and has just opened one in the U.S. for the new S60 sedan.

The tariffs have already had an effect on Volvo as the automaker shifted production of some U.S.-spec XC60 SUVs from its Chinese plant to one in Europe in July following the announcement of a 25-percent tariff on Chinese-made cars.

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Separately, Samuelsson announced Monday that he has extended his contract with Volvo for another two years until 2022.

Note, while Volvo holds back on its IPO, two other automakers are proceeding full steam ahead with their own. Chinese electric car startup Nio launched its IPO on the New York Stock Exchange in August and is expected to see its shares priced on Tuesday. Aston Martin has also announced an intention to launch an IPO later this year on the London Stock Exchange.

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