Volvo cars are known for being dependable and dull. Less so the Swedish brand’s Chinese owner Zhejiang Geely Holding. On Wednesday it executed a screeching about-turn on plans to merge the marque with its Chinese carmaker, Geely Automobile, and then possibly list the combined group in Stockholm. Instead, the $33 billion Geely will merely combine the companies’ engine divisions. It’s just the latest episode of erratic driving from founder Li Shufu, who scrapped both selling Volvo and a mooted $30 billion initial public offering in 2018.
A delay may be no bad thing. Overall car sales are projected to bounce by 12% this year in Europe, according to Volkswagen, compared to 8.5% in China. But European valuations remain low: UBS reckons continental gas guzzlers trade at less than 8 times 2021 earnings, below a global average of 11.5 times. If Geely waits for a rebound to accelerate and can show some cost savings too, it can still find lucrative parking space on public markets.