Tag: Volvo

Volvo Cars feels margin pressure from US-China tariff war

Kristian Helgesen | Bloomberg | Getty Images
Automobiles nearing completion stand on the production line at the Volvo Cars plant in Torslanda, Sweden.

Volvo Cars, owned by China's Geely, reported higher full-year revenue on Thursday, but said its profit margins had slipped and were expected to remain under pressure this year.

Carmakers have faced rising costs and pricing pressure in some markets due to a trade war between Washington and Beijing in 2018 as well as slower demand from Europe and from China, the biggest autos market.

“For 2019, we see another year of volume growth as we continue to benefit from our strong product program and increased capacity. But we have to be realistic and acknowledge that margins will remain under continued pressure,” Volvo Chief Executive Hakan Samuelsson said in a statement.

Suppliers and automakers have issued new warnings and results misses this year, with Daimler this week reporting a fall in fourth-quarter operating profit.

Volvo said its operating profit increased by 0.9 percent to 14.2 billion Swedish crowns ($1.5 billion) although its margin fell to 5.6 percent from 6.7 percent. This was despite its 2018 revenue rising by 21 percent to 252.7 billion Swedish crowns.

Volvo has been on a growth path under Geely's umbrella, with five straight years of record sales, aided by its steady push into premium automobiles, pitted it against Daimler's Mercedes-Benz and its fellow German rival BMW.

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The Swedish-based firm postponed plans for a listing last year, citing the adverse impact of the tariff war and an industry downturn, while also taking on the costs of retooling its factories in an effort to limit the negative tariff impact.

Speaking to CNBC's “Squawk Box Europe” on Thursday, Samuelsson said the slowdown in the Chinese market had not blindsighted the company.

“After many years of constant growth in China (there is) finally some reduction – I think that shouldn't really be a surprise to anybody,” he said.

“In the European market and the U.S. market we don't see any clear signs of a downturn so far. We really see that this year will be another year of growth because we have the best profit program ever and of course we have the capacity with new factories. Strategically for us it's very important to use that and then improve our market share.”

However, Samuelsson added that an IPO was not a part of this year's growth strategy for Volvo Cars.

“We said it's an option, and it's up to our owner, but we decided right now the climate in the market (is) not suitable for an IPO, so we put that on ice – it's not going to happen this year and we have no plans for that,” he told CNBC.

– CNBC's Chloe Taylor contributed to this report.

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UPDATE 1-Volvo Cars feels margin pressure from U.S.-China tariff war

STOCKHOLM (Reuters) – Chinese-owned Volvo Cars reported a fall in 2018 profit margins as a prolonged trade war between Washington and Beijing pushed up costs and resulted in pricing pressure in its main market China. FILE PHOTO: Volvo Cars U.S. production plant is pictured in Ridgeville, South Carolina, U.S. June 20, 2018. REUTERS/Randall Hill The… Continue reading UPDATE 1-Volvo Cars feels margin pressure from U.S.-China tariff war

CORRECTED-Volvo Cars feels margin pressure from U.S.-China tariff war

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Swedes unite: NEVS pairs Saab with Swedish supercarmaker Koenigsegg

Koenigsegg Agera FE Thor and Vader
Swedish automakers all seem to be going electric, and Chinese investors are bringing them together.

In the latest announcement last week, Hong Kong health-insurance conglomerate Evergrande Health flexed its muscle to scoop up a second Swedish automaker.

Last month, Evergrande, which became most famous in the U.S. for its previous tumultuous investment in Faraday Future, bought a controlling interest National Electric Vehicle Sweden, which represents essentially the remainder of Swedish automaker Saab.

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NEVS now builds electric versions of the last Saab 9-3 for sale in China, and they constitute a large portion of ride-sharing cars in the country.

Last week, Evergrande added to its Swedish auto-making stable when NEVS bought Swedish exotic automaker Koenigsegg, once known for building the fastest production car in the world.

The deal, valued at $170 million, gives NEVS a 20 percent stake in the exotic automaker.

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Evergrande has announced its intention to add an electric-car component to its conglomerate and has been scooping up the small Swedes since a large portion of its investment in Faraday Future dissolved in January following legal warfare. The Swedish investments followed quickly after Evergrande and Faraday Future agreed to restrict their tie-up to end their disputes last month.

Koenigsegg builds hyper-exotic sports cars capable of speeds well over 250 mph.

Other hypercar-makers, such as the newly spun-off Pininfarina, and Serbian Rimac, as well as traditional automakers breaking into making such cars, have announced that they will go all electric, which may put pressure on competitors such as Koenigsegg to launch electric exotics as well.

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As Michael Perschke, CEO of Pininfarina told Green Car Reports last July, “It no longer works to launch an aspirational brand with a gas engine. You have to start in the 21st Century.”

Joining forces with NEVS and Evergrande could give Koenigsegg access to electric-car technology and supplies.

If that happens, it won't be immediate. Koenigsegg announced on Friday that it is developing a new “entry-level” car for $1.15 million that will have a cam-less gasoline engine.

NEVS 9-3 concept, 2017 CES Asia

It's also possible that Koenigsegg simply wants some space in Saab's old factory in Trollhättan, Sweden, which this deal specifically provides.

Saab's former Swedish rival Volvo is also owned by a Chinese automaker, Geely, which has announced that it plans to convert the brand to focus on electric and plug-in cars.