A BRIEF ANALYSIS OF volvocar ab: STOCK - (volcar-b.st)

BusinessVolvo Car AB is a Sweden-based automotive brand. Volvo Car Group is focused on the design, engineering, manufacturing, distribution, and sale of passenger cars, with particular focus on sustainability, fully electric cars, and direct consumer relations, including subscription and other new mobility services. Volvo Car Group addressable market is the global premium passenger car market. Moreover, the Company intention is to be a pure electric car company and as a result it is undergoing a shift in its business model to a direct sales model in most of its markets. Volvo Cars commitment to electrification also results in the launch of Polestar, a progressive stand-alone electric performance car brand, in which Volvo Cars owns shares. Volvo Cars also holds shares in the automotive brand LYNK&CO, which focuses on young open-minded urban people through a flexible customer offering.

Brands

​Volvo Cars is a small producer, with a global market share of 1–2 percent. The largest market, China, represented some 23 per cent of the total sales volume in 2022, followed by Europe (21%), the US (18%), other markets(11%), Sweden(6%), the UK (5.5%), and Germany (6%).

Key Data - of VolvoCar stock

​The following tables provide a summary of
VolvoCar Income Statements

Sources of VolvoCar revenues
Unit cars sold annually is descending since top Q4 2022. One way to protect revenue is selling at higher price than of year 2020.

What do they offer ?

​We can see clearly that automotive branch generates the greatest revenue in total 89% of the 2021 revenues, while used cars business covers 7%.  

Sales per region

​Sales per region is well diversified. This provides a protection against a sharp macroeconomic decline.

R & D

​One of the most significant and noticeable aspects that distinguish modern cars even from their 10-year-old predecessors is the number of software-controlled options. As we all know, describing the Volvo brand in one word is simply: safety. Therefore, role of software has kept providing Volvo brand to live up to its brand. This means not only quality-of-life improvements for the drivers but also that the manufacturers need to come up with new innovative solutions to compete. Latest engineered performance seen in VolvoCar is a result of the constant investment and tireless innovation of their R&D team. We know R&D section plays a significant role for modern automotive in order to succeed. The cost of R&D for VolvoCar is as follows.

​Since 2012 VolvoCar R&R expense on average was -4.9% of its revenue. This means Volvo have managed to keep R&D costs low while improving its digital technology. 

VolvoCar
​Historical
​Stock Price

Monthly VolvoCar stock
price fluctuations

Valuation

​Let’s see if  VOLCAR  is undervalued compared to its fair value, analyst forecasts and its price relative to the market? Base of PE Ratio VolvoCar is good value 11x compared to the peer average as date November 2022. However, VolvoCar is slightly expensive compare to the Global auto industry average. 

SWOT ANALYSIS

Reading the swot analysis of Volvo, we will understand what are the critical factors which are responsible for the success of this firm and factors which can be dynamic and game-changing in the future.
​
Strength of VolvoCar
VolvoCar has strong market position – they are the market leader for most of its segments. Volvo has a strong position throughout the world due to its continuous expansion and use of modern technology. Strong R&D team provides them an edge over competitors’ products, and it helps them to stay in the race and innovate. At the same time what matters for customers is safety, reliable brand – Volvo is one of the most reliable and trusted brands in the world. They have a reputation for making the world’s safest cars for several decades. Having a successful and strong market presence also what helps a company like Volvo be recognized in the industry.

Weaknesses of VolvoCar,
Weaknesses are internal factors that place the company at a disadvantage compared to its competitors. As most auto manufacturing, in 2019 Volvo to recall 460,769 cars worldwide over air bag rupture fatality. Lately in 2022 Volvo's plug-in hybrid XC60 and XC90 have been recalled to fix a problem with the engine control module, although owners won't need to visit a dealer for a fix. If problems continue to rise thus can affected the brand image of VolvoCar and can has create a bad impact on the brand name of VolvoCar going forward.

Opportunities for VolvoCar
Opportunities are external factors that the company can potentially benefit from when recognized. It is not surprising that electric cars are the future of the automation industry. After huge demand for Tesla cars and the public’s concern towards sustainability become a huge opportunity for electric vehicles. Volvo has already set a goal to end fuel vehicle with in 2030. Therefore, Volvo Cars commitment to electrification also results in the launch of Polestar, a progressive stand-alone electric performance car brand, in which Volvo Cars owns shares. Volvo Cars also holds shares in the automotive brand LYNK&CO, which focuses on young open-minded urban people through a flexible customer offering.
 

Treats to VolvoCar
Threats are external factors that a company should be aware of to hold its status in the market. Threats to Volvo – Price wars – Internal competition with competitors causes price wars. Volvo faces tough competition in all its segments which forces them to do product competition i.e., fighting for giving a better quality of product or service. Currency fluctuations – Volvo operates globally in so many countries and hence it receives many kinds of currencies. All currencies are not stable, and some are unacceptable due to fluctuations happening in their value. Volvo accepts Swedish Konner and US dollars create fluctuations in their total value.
 
Competitors of Volvo
​Following are the major competitors of VolvoCar

• BMW -X3
• Mercedes-Benz
• Land Rover – Discovery Sport
• Hyundai Santa Fe
• Tesla
• NIO
• Audi Q5
• Lexus NX

VolvoCar - FINANCIAL HEALTH

​Management

ManagementJim Rowan(57Y)
0.5-year tenure
$NA salary
VOLCAR B's management team is not considered experienced ( 0.5 years average tenure), which suggests a new team. However, VOLCAR B's board of directors are considered experienced (7.8 years average tenure).
Mr. James Rowan, also known as Jim, is a Director of Polestar Automotive Holding UK PLC from June 2022. He serves as CEO & President at McDonald Hopkins, LLC since March 21, 2022. He serves as Director of Volvo Car AB (publ.) since May 11, 2022 and serves as its Chief Executive Officer and President.
​
He serves as Director of PCH International since August 26, 2020. He serves as Chief Executive Officer of Consumer & Healthcare Division and Director at Ember Technologies, Inc. since February 16, 2021. He serves as Senior Advisor at KKR & Co. Inc. since November 2020. He served as Lead Independent Director at Nanofilm Technologies International Limited. He served as the Chief Operating Officer of Global Manufacturing & Supply Chain at BlackBerry Limited (aka Research in Motion Limited) from July 2011 to March 2012. He served as Senior Vice President of Global Manufacturing & Supply Chain at Research In Motion Limited. He served as an Executive Vice President of Worldwide Operations for Celestica. Prior to that, he was based in Vienna, Austria where he worked for Flextronics as the Vice President of Operations for their European Region and a senior executive at Flextronics. He was also a Founder of two start-ups which were extremely successful. He serves as a Member of Executive Advisory Board at SCM World Limited. He brings global experience in the consumer and technology sectors. He led Dyson as its CEO between 2017 and 2020, during which time he accelerated the company’s e-commerce strategy and significantly grew its market share worldwide.

Weybourne Services Singapore Pte. Ltd. Dyson Appliances (Aust.) Pty Limited Dyson B2B, Inc Dyson B2B Technical Services Inc Dyson Canada Limited Dyson Direct, Inc Dyson Hong Kong Limited Dyson K.K. Dyson Manufacturing Sdn.
Bhd. Dyson New Zealand Limited Dyson Technical Services, Inc. Dyson Technology Inc Dyson, Inc. Sakti3, Inc. Dyson SAS Dyson Research and Development (Shanghai) Limited Dyson Technology (Beijing) Ltd Dyson Technology (Shanghai) Limited. He a Dictatorship in Momentum Technologies Pte Ltd PCH International Limited. He is an Advisory Board Member of Nanyang Technological University’s School of Mechanical & Aerospace Engineering.
He was Non-Executive Non-Independent Director at Nanofilm Technologies International Limited since May 14, 2021 until March 01, 2022. He works as advisor at Sydrogen Energy Pte. Ltd. (Sydrogen).

Ownership Structure

•   Institutions: 37.3 %
•  General Public: 4.3
  
•   Individual Insiders: 0.5%
• Private Companies: 84%

Top Institutional Holders