Volvo delays the IPO, latest victim of the Trump tariff war against China

Volvo Cars has become the latest victim of the intensification of global trade tensions, prompting the automaker to postpone its stock sale plans and radically alter its production network to ease the burden of barriers to trading. ;export.

Less stable market conditions, which particularly affected car manufacturers, have made the calendar "not optimal", said Monday the general manager, Hakan Samuelsson, during a telephone interview. This decision comes after the first investor returns in July estimated that the company, owned by the Chinese group Zhejiang Geely Holding Group (Gelyy), was well below the high-end estimates.

Volvo's retreat, which would involve a stock sale this autumn in Sweden and Hong Kong, shows the escalating trade dispute weighing on the profits and valuations of automakers like Daimler (ddaif) and BMW ( bmyyy). Volvo exports vehicles from China to the United States and has planned to do the opposite of a new factory in Charleston, South Carolina. These plans are no longer viable, with China and the United States engaging in a trade war on both sides, Volvo said.

"Trade issues are difficult for us because they impact cars shipped between China and the United States. That's a big inconvenience, "said Samuelsson. "The risk is that these headwinds will increase."

Potential listing projects Volvo's Polestar brand, which produces high-performance electrified vehicles, remains a possibility, he said. Monday, the British manufacturer of sports cars, Aston Martin, decided to register its shares in London, citing the recovery of the company.

Higher rates

BMW and Daimler, both of which export US sport utility vehicles to China, which face higher prices, are trading at price / earnings valuations of 5.5 and 6.2 times lower than at least in 2014. In addition to global production facilities, President Donald Trump has threatened to impose greater barriers to imports from the European Union.

Volvo produces the premium S90 sedan and the compact XC60 SUV in its Chengdu and Daqing factories in China. About a quarter of the vehicles are exported, most of which are destined for the United States. Last week, Trump doubled its threats to impose higher tariffs on the country's products. import levies on US cars at 25%, up from 15%.

As a result, Volvo plans to use its plant in Torslanda, Sweden, to ship cars to the US, said Samuelsson, adding that the impact on the XC60 would be "correct" while the S90 would be "more difficult" . elaborate on the financial impact of higher tariffs.