Volvo IPO: Everything you need to know about Volvo Cars

Swedish car brand Volvo is set for a stock exchange debut on October 28, targeting a market value of up to 200 billion kronor ($23.1 billion). Volvo Cars' fortunes improved after Chinese conglomerate Geely bought it from Ford in 2010 for $1.8 billion. Read on for more detail.

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When will Volvo Cars go public?

Volvo Cars will go public on the Stockholm stock exchange debut on October 28, targeting a market value of up to 200 billion kronor ($23.1 billion)

Its current owner Geely will remain the main shareholder following the IPO. Although the two companies have developed a close collaboration that extends beyond ownership, Geely and Volvo Cars share technologies and production facilities.

An attempt to go public in 2018 was abandoned by Geely because of fears that a trade war between the US and China could hurt the company’s valuation.

Those fears appear to be less of a concern now, although the trade war hasn’t gone away.

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How much is Volvo Cars worth?

Volvo Cars is expected to be worth up to 200 billion kronor ($23.1 billion) after its IPO.

The company said in a statement the expected share price would be between 53 and 68 kronor per share, "corresponding to a market capitalisation of Volvo Cars of 163–200 billion kronor after completion".

Shares available for public trading are expected to account for between 19.5% and 24% of the company's total shares.

Volvo added that it expected to raise around 25 billion kronor before transaction costs from the newly issued shares.

The final IPO price is to be announced on October 27, as is a separate IPO from electric car manufacturer Polestar, a joint subsidiary of Volvo Cars and Geely.

What does Volvo Cars do?

Volvo Cars is a world-leading manufacturer of SUVs, station wagons, hatchbacks, sedans and compact executive sedans.

For the first six months of 2021, the XC40, a mid-sized SUV that’s also a plug-in hybrid, was its top-selling model. A total of 118,121 XC40s were sold, almost double the volume from the same period 12 months previously.

The XC40 uses a turbocharged 1.5-litre petrol engine generating 161bhp.

Volvo Cars trades through more than 2,000 local dealers from around 100 sales companies worldwide, and its biggest markets are China, the United States, Sweden, the United Kingdom and Germany. Most of its worldwide employees are based in Sweden.

The heavy truck and construction equipment conglomerate AB Volvo has been a separate entity since 1999. It’s the world's second largest manufacturer of heavy-duty trucks and already trades on Nasdaq Stockholm.

How does Volvo Cars make money?

Volvo Cars makes money by realising the hugely important role hybrid and electric vehicles play in people’s lives.

Its growing range of plug-in hybrid helped boost retail sales by 41% in the first six months of 2021 with strong global demand for the new models.

Its first fully electric car, the XC40 Recharge, was released in markets around the globe in 2020.

After the XC40, the XC60 is Volvo Cars’ second most popular model. A slightly larger vehicle, it is also a hybrid SUV and was named Family SUV of the Year by What Car? Magazine.

Additionally, Volvo Cars maintains a strong rapport with customers who are happy to put safety ahead of performance, and will pay a premium for added features not always available elsewhere.

To that end, the company has achieved an impressive list of safety milestones throughout its history.

What is Volvo Cars’ business strategy?

Volvo Cars has a business strategy centred around one of the most ambitious modernisation plans among carmakers of its scale. It has pledged to sell only electric vehicles by 2030.

It is already planning how to phase out all its cars with internal combustion engines, including hybrids.

In a press release from March 2021, it stated “legislation as well as a rapid expansion of accessible high-quality charging infrastructure will accelerate consumer acceptance of fully electric cars.

Volvo Cars’ move towards full electrification comes alongside an increased focus on online sales. All fully electric models will be available online only.

Its first fully electric car, the XC40 Recharge, was released in markets around the globe in 2020. Volvo Cars also has some targets it hopes to achieve by the end of 2025, including:

  • Sales of 1.2 million cars a year
  • EBIT margin of 8–10%
  • 40% reduction of CO2 emissions per car between 2018 and 2025
  • 50% of sales will be fully electric cars
  • 50% of sales online

 

What is Volvo Cars’ dividend policy?

Volvo Cars says its dividend pay-out “will be assessed year to year based on Volvo Cars’ net income, financial position and investment needs.”

It adds: “As visibility on the transformation increases in the medium-term, the group’s ambition is to increase dividend pay-outs towards historical levels and industry average.”

Is Volvo Cars profitable?

Volvo Cars posted a healthy profit in the first half of 2021 as demand for electric cars pushed earnings above pre-pandemic levels.

The profit of $1.52 billion, more than double its profit in the corresponding period of 2019, was an important benchmark en route to its IPO.

Like many other carmakers, Volvo Cars had been forced to cut production due to a global shortages of semiconductors, but it has recovered powerfully from the malaise of the pandemic.

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Volvo Cars sold more than 770,000 vehicles in the 12 months to the end of June, valued at a minimum of $20bn, roughly in line with the market value of larger premium competitors BMW and Daimler.

There does remain some uncertainty going forward about obtaining components in a timely fashion – something that negatively affected output in September 2021.

Volvo Cars’ chief financial officer Björn Annwall said those shortages were “due to Covid-19 lockdowns in South-East Asia” and insisted the problem was “now solved as factory workers are vaccinated and the factories are up and running again”.

Who owns Volvo Cars?

Geely owns Volvo Cars, and, according to reports, it is likely to remain the single largest shareholder of the carmaker after flotation.

Geely is itself privately owned by Chinese billionaire Li Shufu and entered the autombile industry in 1997.

It sells passenger vehicles under the Geely Auto, Lotus, Lynk & Co and Proton brands as well as commercial-only vehicles under the London EV Company (the name behind London’s black cabs).

The group sold more than 1.5 million cars in 2018.

Board of Directors of Volvo Cars

  • Li Shufu (Eric), Chairman of the Board of Directors
  • Lone Fønss Schrøder, Vice Chairman of the Board of Directors
  • Håkan Samuelsson, Chief Executive Officer
  • Li Donghui (Daniel)
  • Winfried Vahland
  • Michael Jackson
  • Betsy Atkins
  • Thomas Johnstone
  • Xingsheng Zhang (Jim)
  • Jonas Samuelson
  • Diarmuid O’Connell
  • Lila Tretikov
  • Glenn Bergström, Employee Representative
  • Jörgen Olsson, Employee Representative
  • Marko Peltonen, Employee Representative



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