STOCKHOLM/LOS ANGELES (Reuters) – Volvo Cars, owned by China’s Geely, has no current plans to go for a stockmarket listing, its chief executive said, more than two months after the Swedish carmaker postponed its flotation blaming trade tensions and an automotive stocks downturn.
FILE PHOTO: Hakan Samuelsson, President and Chief Executive Officer of Volvo, smiles during an interview with Reuters after attending a panel discussion about self-driving cars at Diaoyutai State Guesthouse in Beijing, China, April 7, 2016. REUTERS/Kim Kyung-Hoon/File Photo
Volvo and its parent had been working on an initial public offering, potentially valuing the carmaker at $16 billion to $30 billion.
In September, the company dropped the IPO plans but said that a listing was still possible in the future.
“There are no plans or time schedule for entering into the equity market,” Chief Executive Hakan Samuelsson told Reuters on the sidelines of the Los Angeles Auto Show on Wednesday.
When asked if the company might instead consider raising funds via convertible bonds, he said: “It’s not the right timing and also it’s a turbulent market.”
An IPO would have helped bolster Volvo’s coffers at a time when carmakers need cash to back their plans to develop electric and driverless cars.
Samuelsson reiterated on Wednesday that Volvo, which is developing Polestar as an electrified performance brand and owns a stake in Geely stablemate Lynk & Co, would finance its development using existing cash flows.
He had said in September when the IPO was dropped that the company had “other alternatives” to raise finance.
Conditions in the automotive industry remain tough with the trade conflict between China and U.S. creating headwinds, China car sales falling and new emissions test standards hitting the European market. China is Volvo’s largest market.
Profits at Volvo have been squeezed by rising costs due to product launches plus the impact of higher tariffs from a trade spat between Washington and Beijing has escalated.
The U.S./China trade war could also hurt the pace of expansion at Volvo’s new U.S. factory in South Carolina, where it has plans to invest $1.1 billion and hire about 4,000 people, a spokesman said on Wednesday, confirming comments in U.S. media.
“The plans for Charleston… remains, however trade issues may impact the pace of the expansion, although we cannot quantify the effects,” he said.
The company said last week that it had decided to split production of its S60 luxury sport sedan between the United States and China, changing an original plan to manufacture the vehicle only at its U.S. factory and export it to China.
The spokesman said the S60 would be manufactured at the group’s plant in Daqing, China from next year to cover domestic sales and exports to some Asia-Pacific markets.
(The story corrects the last paragraph to say S60 model will be made in Daqing, not Chengdu, after spokesman corrects his comment.)
Reporting by Esha Vaish in Stockholm and Alexandria Sage in Los Angeles, additional reporting by Yilei Sun in China, editing by Johannes Hellstrom and Jane Merriman