BEIJING -- Volvo Cars and its owner, Zhejiang Geely Holding Group, have postponed plans to float shares in the Swedish automaker, blaming trade tensions and a downturn in automotive stocks.
Volvo said plans for a listing in Stockholm had been delayed indefinitely. "We have come to the conclusion that the timing is not optimal for an IPO right now," Volvo CEO Hakan Samuelsson said.
Volvo and its Chinese parent had been discussing an initial public offering to value the automaker at between $16 billion to $30 billion, sources have previously said. The company said on Monday a listing was still possible in the future.
Samuelsson said IPO prospects had dimmed with the business cycle, amid a broad-based decline in automotive shares that has dragged the Stoxx 600 Autos & Parts index 15 percent lower so far this year.
Even before the recent sector sell-off, however, some observers were dubious about the $30 billion upper end of Volvo's target valuation. "We had expressed our reservations concerning lofty valuation ambitions before," Evercore ISI analyst Arndt Ellinghorst said on Monday. "Trade wars are just one red flag."
Washington's escalating trade spat with Beijing and tensions with Europe have rattled automotive investors, hitting share prices and adding volatility to market outlooks.
Volvo is less exposed than its German premium rivals to U.S.-China tariffs, however, and has said it will juggle production of its XC60 SUV to reduce their impact.
Geely, which paid Ford Motor $1.8 billion for Volvo in 2010, also has stakes in Mercedes-Benz parent Daimler, truckmaker AB Volvo and UK sports-car maker Lotus.
Geely and its boss Li Shufu concluded that Volvo should make deeper inroads into the Chinese market before listing, a person familiar with the group's thinking told Reuters. Volvo delivered 61,480 cars in China in the first half, a fraction of sales by rivals Mercedes, BMW and Audi.
Volvo, which is developing Polestar as an electrified performance brand and owns a stake in Geely stablemate Lynk & CO, has "other alternatives" to raise finance in future, CEO Samuelsson said on Monday.
The IPO postponement reflects bigger concerns about "price development after a potential IPO" rather than about the initial valuation, he said, citing sensitivities over the prevalence of public pension funds among Swedish institutional investors likely to participate.
Amid growing market uncertainties, Samuelsson said, "what made me nervous especially was leaving headroom for investors."
The postponement came as Britain's Aston Martin said it will to press ahead with its own flotation. Samuelsson said Aston Martin, as a pure luxury play, was "more like Ferrari" - whose widely envied listing came close to late boss Sergio Marchionne's 10-billion-euro target valuation. Like Volvo, Aston Martin was once owned by Ford.
Separately, Volvo Cars said it extended Samuelsson's contract by two years to 2022.
"The extension provides the company with management continuity as it continues to transform itself into a global and diversified mobility service provider," Volvo said in a statement on Monday.
Samuelsson became CEO in October 2012 and he is credited with giving the automaker a "complete transformation," the statement said. "This has established the company as a strong competitor in the premium segment with a completely new range of premium models based on in-house developed platform, powertrain, safety and infotainment technologies."
In the statement, Samuelsson said: "I have enjoyed leading this company tremendously so far and I look forward to continuing the transformation of our company."
Automotive News contributed to this report.