Volvo puts share sale plans on ice

Volvo has become the latest victim of intensifying global trade tension, prompting the car maker to delay plans for a share sale and make sweeping changes to its production network to lighten the burden of higher export barriers.

Volvo has become the latest victim of intensifying global trade tension, prompting the carmaker to delay plans for a share sale and make sweeping changes to its production network to lighten the burden of higher export barriers.

Less stable market conditions, which have hit carmakers especially hard, make the timing “not optimal”, CEO Hakan Samuelsson said on Monday.

Volvo and its parent, Zhejiang Geely, discussed valuing the Sweden-based vehicle maker in a range of $16bn-$30bn in a share sale, people with knowledge of the matter said in May.

Investors supported Volvo’s and Geely’s internal targets on a valuation during initial talks and the company had secured cornerstone commitments in line with those expectations, a spokesperson said.

Volvo’s backtracking from plans — said to involve a share sale soon in Sweden and Hong Kong — shows the worsening strain from trade conflict.

Volvo exports vehicles from China to the US and had planned to do the reverse from a new factory in Charleston, South Carolina. Those plans are no longer viable as China and the US engage in a tit-for-tat trade war resulting in higher tariffs on both sides, Volvo said.

Trade issues affect “cars shipped between China and the US. It’s a huge drawback,” Samuelsson said. “The risk is that these headwinds will increase.”