Obligation Volva 2.125% ( XS1971935223 ) en EUR

Volva

100 % ▼

Suede

XS1971935223 ( en EUR )

2.125% par an ( paiement annuel )

02/04/2024 - Obligation échue

Prospectus brochure de l'obligation Volvo XS1971935223 en EUR 2.125%, échue

100 000 EUR

600 000 000 EUR

Volvo est un constructeur automobile suédois spécialisé dans la fabrication de véhicules réputés pour leur sécurité, leur design scandinave et leur technologie de pointe.

L'Obligation émise par Volva ( Suede ) , en EUR, avec le code ISIN XS1971935223, paye un coupon de 2.125% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 02/04/2024

OFFERING CIRCULAR

VOLVO CAR AB (PUBL)
(a public limited liability company incorporated under the laws of the Kingdom of Sweden)
EUR3,000,000,000
Euro Medium Term Note Programme
Guaranteed by
VOLVO CAR CORPORATION
(a private limited liability company incorporated under the laws of the Kingdom of Sweden)
Volvo Car AB (publ) (the "Issuer") has established a Euro Medium Term Note Programme (the "Programme") for the issuance of
up to EUR3,000,000,000 in aggregate principal amount of notes (the "Notes") guaranteed by Volvo Car Corporation (the
"Guarantor"). The maximum aggregate principal amount of all Notes from time to time outstanding under the Programme will not
exceed EUR3,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement described
herein), subject to increase as described herein.
Application has been made to the Luxembourg Stock Exchange, in its capacity as market operator of the Euro MTF market (the
"Euro MTF Market") under the Luxembourg law on prospectuses for securities dated July 10, 2005 (the "Prospectus Act 2005")
for the Notes issued under the Programme during the period of twelve months from the date of this Offering Circular to be admitted
to trading on the Euro MTF Market and admitted to listing on the Official List of the Luxembourg Stock Exchange. The Euro MTF
Market is not a regulated market for the purposes of Directive 2014/65/EU on markets in financial instruments. This Offering
Circular is a prospectus for the purposes of the Prospectus Act 2005 and for the purposes of the admission to trading of the Notes on
the Euro MTF Market in accordance with the rules and regulations of the Luxembourg Stock Exchange. This document does not
constitute a prospectus for the purposes of Article 3 of Directive 2003/71/EC (as amended or superseded, the "Prospectus
Directive") and relevant implementing measures in Luxembourg, and may not be used for any purpose other than the admission to
trading of the Notes on the Euro MTF Market.
The Issuer's long term senior unsecured obligations have been rated BB+ by S&P Global Ratings ("Standard & Poor's") and Ba1
by Moody's Deutschland GmbH ("Moody's"). Standard & Poor's and Moody's are established in the European Economic Area (the
"EEA") and registered under Regulation (EU) No 1060/2009, as amended (the "CRA Regulation"). Tranches of Notes to be issued
under the Programme will be rated or unrated. Where a Tranche (as defined herein) of Notes is to be rated, such rating will not
necessarily be the same as the rating assigned to the Programme.
A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal
at any time by the assigning rating agency.
Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the abilities of the
Issuer and Guarantor to fulfil their respective obligations under the Notes are discussed under "Risk Factors" below.
The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities
Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and Notes in bearer form are
subject to U.S. tax law requirements. The Notes may not be offered, sold or (in the case of Notes in bearer form) delivered within
the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act
("Regulation S")) except in certain transactions exempt from the registration requirements of the Securities Act.
Arranger
CITIGROUP
Dealers
CITIGROUP
DEUTSCHE BANK
ING
J.P. MORGAN

Offering Circular dated 21 December 2018
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CONTENTS

Page
IMPORTANT NOTICES ............................................................................................................................. 1
FORWARD-LOOKING STATEMENTS .................................................................................................... 5
RISK FACTORS .......................................................................................................................................... 7
INFORMATION INCORPORATED BY REFERENCE .......................................................................... 37
GENERAL DESCRIPTION OF THE PROGRAMME ............................................................................. 38
PRICING SUPPLEMENTS AND DRAWDOWN OFFERING CIRCULARS ........................................ 42
FORMS OF THE NOTES .......................................................................................................................... 43
OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM .............. 49
TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 51
FORM OF PRICING SUPPLEMENT ....................................................................................................... 84
USE OF PROCEEDS ................................................................................................................................. 94
BUSINESS ................................................................................................................................................. 95
TAXATION ............................................................................................................................................. 116
SUBSCRIPTION AND SALE ................................................................................................................. 119
GENERAL INFORMATION .................................................................................................................. 123

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IMPORTANT NOTICES
Responsibility for this Offering Circular
Each of the Issuer and the Guarantor accepts responsibility for the information contained in this Offering
Circular and declares that, having taken all reasonable care to ensure that such is the case, the information
contained in this Offering Circular is, to the best of its knowledge, in accordance with the facts and
contains no omission likely to affect its import.
Pricing Supplement/Drawdown Offering Circular
Each Tranche of Notes (as defined below) will be issued on the terms set out herein under "Terms and
Conditions of the Notes" (the "Conditions") as supplemented, amended or replaced by a document
specific to such Tranche called a Pricing Supplement (a "Pricing Supplement") or in a separate
drawdown offering circular specific to such Tranche to be approved by the Luxembourg Stock Exchange
(a "Drawdown Offering Circular") as described under "Pricing Supplements and Drawdown Offering
Circulars" below.
Other Relevant Information
This Offering Circular must be read and construed together with any supplements hereto, with any
information incorporated by reference herein and, in relation to any Tranche of Notes which is the subject
of Pricing Supplement, must be read and construed together with the relevant Pricing Supplement. In the
case of a Tranche of Notes which is the subject of a Drawdown Offering Circular, each reference in this
Offering Circular to information being specified or identified in the relevant Pricing Supplement shall be
read and construed as a reference to such information being specified or identified in the relevant
Drawdown Offering Circular unless the context requires otherwise.
The Issuer and Guarantor have confirmed to the Dealers named under "Subscription and Sale" below that
this Offering Circular contains all information which is (in the context of the Programme, the issue,
offering and sale of the Notes and the Guarantee of the Notes (as defined in the Conditions)) material;
that such information is true and accurate in all material respects and is not misleading in any material
respect; that any opinions, predictions or intentions expressed herein are honestly held or made and are
not misleading in any material respect; that this Offering Circular does not omit to state any material fact
necessary to make such information, opinions, predictions or intentions (in the context of the Programme,
the issue, offering and sale of the Notes and the Guarantee of the Notes) not misleading in any material
respect; and that all proper enquiries have been made to verify the foregoing.
In the case of any Notes which are to be offered to the public in a Member State of the European
Economic Area (an "EEA Member State") in circumstances which would otherwise require the
publication of a prospectus under the Prospectus Directive, the minimum specified denomination shall be
EUR100,000 (or its equivalent in any other currency as at the date of issue of the Notes).
Unauthorised Information
No person has been authorised to give any information or to make any representation not contained in or
not consistent with this Offering Circular or any other document entered into in relation to the Programme
or any information supplied by the Issuer or the Guarantor or such other information as is in the public
domain and, if given or made, such information or representation should not be relied upon as having
been authorised by the Issuer or any Dealer.
Neither the Dealers nor any of their respective affiliates have authorised the whole or any part of this
Offering Circular and none of them makes any representation or warranty or accepts any responsibility as
to the accuracy or completeness of the information contained in this Offering Circular. Neither the
delivery of this Offering Circular or any Pricing Supplement nor the offering, sale or delivery of any Note
shall, in any circumstances, create any implication that the information contained in this Offering Circular
is true subsequent to the date hereof or the date upon which this Offering Circular has been most recently
supplemented or that there has been no adverse change, or any event reasonably likely to involve any
adverse change, in the prospects or financial or trading position of the Issuer or the Guarantor since the
date thereof or, if later, the date upon which this Offering Circular has been most recently supplemented
or that any other information supplied in connection with the Programme is correct at any time
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subsequent to the date on which it is supplied or, if different, the date indicated in the document
containing the same.
Restrictions on Distribution
The distribution of this Offering Circular and any Pricing Supplement and the offering, sale and delivery
of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering
Circular or any Pricing Supplement comes are required by the Issuer, the Guarantor and the Dealers to
inform themselves about and to observe any such restrictions. For a description of certain restrictions on
offers, sales and deliveries of Notes and on the distribution of this Offering Circular or any Pricing
Supplement and other offering material relating to the Notes, see "Subscription and Sale". In particular,
the Notes have not been, and will not be, registered under the Securities Act and are subject to U.S. tax
law requirements. Subject to certain exceptions, Notes may not be offered, sold or, delivered within the
United States or to, or for the account or benefit of, U.S. persons.
Neither this Offering Circular nor any Pricing Supplement constitutes an offer or an invitation to
subscribe for or purchase any Notes and should not be considered as a recommendation by the Issuer, the
Guarantor, the Dealers or any of them that any recipient of this Offering Circular or any Pricing
Supplement should subscribe for or purchase any Notes. Each recipient of this Offering Circular or any
Pricing Supplement shall be taken to have made its own investigation and appraisal of the condition
(financial or otherwise) of the Issuer and the Guarantor.
IMPORTANT EEA RETAIL INVESTORS - If the Pricing Supplement (or Drawdown Prospectus,
as the case may be) in respect of any Notes includes a legend entitled "Prohibition of Sales to EEA Retail
Investors", the Notes are not intended to be offered, sold or otherwise made available to and should not be
offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail
investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1)
of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive
2002/92/EC (as amended or superseded, the "Insurance Mediation Directive"), where that customer
would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended,
the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail
investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making
them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
MIFID II product governance / target market  The Pricing Supplement in respect of any Notes will
include a legend entitled "MiFID II Product Governance" which will outline the target market assessment
in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person
subsequently offering, selling or recommending the Notes (a "distributor") should take into
consideration the target market assessment; however, a distributor subject to MiFID II is responsible for
undertaking its own target market assessment in respect of the Notes (by either adopting or refining the
target market assessment) and determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the Product
Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product Governance Rules"),
any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the
Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of
the MIFID Product Governance Rules.
Programme Limit
The maximum aggregate principal amount of Notes outstanding at any one time under the Programme
will not exceed EUR3,000,000,000 and for this purpose, any Notes denominated in another currency shall
be translated into euros at the date of the agreement to issue such Notes (calculated in accordance with the
provisions of the Dealer Agreement as defined under "Subscription and Sale"). The maximum aggregate
principal amount of Notes which may be outstanding at any one time under the Programme may be
increased from time to time, subject to compliance with the relevant provisions of the Dealer Agreement.
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Use of Proceeds
None of the Dealers will verify or monitor the proposed use of proceeds of Notes issued under the
Programme.
Certain Definitions
In this Offering Circular, unless otherwise specified, references to a "Member State" are references to a
Member State of the EEA, references to "U.S.$", "U.S. dollars" or "dollars" are to United States dollars,
references to "SEK" are to Swedish Kroner, the lawful currency of the Kingdom of Sweden, references to
"EUR" or "euro" are to the currency introduced at the start of the third stage of European economic and
monetary union, and as defined in Article 2 of Council Regulation (EC) No 974/98 of 3 May 1998 on the
introduction of the euro, as amended.
In addition, unless otherwise specified or the context requires otherwise in this Offering Circular:
"China Development Bank Facility" means the facilities agreement dated as of 30 November 2012 (as
subsequently amended and restated) between, among others, Volvo Car Corporation as borrower, the
Issuer as guarantor and China Development Bank, Bank of China Limited, Luxembourg Branch, Bank of
Communications Co., Ltd., Offshore Banking Unit and Industrial and Commercial Bank of China
(Europe) S.A., Sucursal En España as original lenders and China Development Bank as agent;
"Chinese Joint Ventures" means the joint ventures Daqing Volvo Car Manufacturing Co., Ltd,
Zhangjiakou Volvo Car Engine Manufacturing Co., Ltd. and Shanghai Volvo Car Research and
Development Co., Ltd;
"EBITDA" means income before income tax, financial income, financial expenses, and depreciation and
amortisation for the period presented;
"European Investment Bank Loan" means the loan agreement dated 8 November 2017 between Volvo
Car Corporation as borrower, the Issuer as guarantor and European Investment Bank as lender;
"Geely" means Zhejiang Geely Holding Group Co. Ltd., a Chinese automotive manufacturing company;
"Group" or "Volvo Cars" means the Issuer and its consolidated subsidiaries;
"Guarantor" means Volvo Car Corporation (legal name, Volvo Personvagnar Aktiebolag);
"IFRS" means the International Financial Reporting Standards of the International Accounting Standards
Board, as adopted by the European Union;
"Issuer" means Volvo Car AB, as the issuer of the Notes;
"Nordic Investment Bank Loan" means the loan agreement dated 1 September 2016 between, among
others, Volvo Car Corporation as borrower, the Issuer as guarantor and Nordic Investment Bank as
lender;
"Revolving Credit Facility" means the revolving credit facility dated 22 June 2017 between, among
others, the Issuer as borrower and Volvo Car Corporation as guarantor; and
"Term Credit Facility" means the term credit facility dated as of 25 June 2015 (as subsequently
amended and restated on 4 March 2016), between Volvo Car Corporation as borrower, the Issuer as
guarantor and AB Svensk Exportkredit (publ) as lender.
Unless otherwise defined in this Offering Circular, capitalised terms shall have the meanings given to
them in the section headed "Glossary".
Rounding
Certain figures included in this Offering Circular have been subject to rounding adjustments; accordingly,
figures shown for the same category presented in different tables may vary slightly and figures shown as
totals in certain tables may not be an arithmetic aggregation of the figures which precede them.
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Ratings
Tranches of Notes issued under the Programme may be rated or unrated. Where a Tranche of Notes is
rated, such rating will not necessarily be the same as the rating(s) described above or the rating(s)
assigned to Notes already issued. Where a Tranche of Notes is rated, the applicable rating(s) will be
specified in the relevant Pricing Supplement. Whether or not each credit rating applied for in relation to a
relevant Tranche of Notes will be (1) issued by a credit rating agency established in the EEA and
registered under the CRA Regulation, or (2) issued by a credit rating agency which is not established in
the EEA but will be endorsed by a CRA which is established in the EEA and registered under the CRA
Regulation or (3) issued by a credit rating agency which is not established in the EEA but which is
certified under the CRA Regulation will be disclosed in the Pricing Supplement. In general, European
regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by
a credit rating agency established in the EEA and registered under the CRA Regulation or (1) the rating is
provided by a credit rating agency not established in the EEA but is endorsed by a credit rating agency
established in the EEA and registered under the CRA Regulation or (2) the rating is provided by a credit
rating agency not established in the EEA which is certified under the CRA Regulation.
Notice to Investors
The Notes may not be a suitable investment for all investors. Each potential investor in the Notes must
determine the suitability of that investment in light of its own circumstances. In particular, each potential
investor may wish to consider, either on its own or with the help of its financial and other professional
advisers, whether it:
(a)
has sufficient knowledge and experience to make a meaningful evaluation of the Notes, the
merits and risks of investing in the Notes and the information contained or incorporated by
reference in this Offering Circular or any applicable supplement;
(b)
has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Notes and the impact the Notes will have on its
overall investment portfolio;
(c)
has sufficient financial resources and liquidity to bear all of the risks of an investment in the
Notes, including Notes where the currency for principal or interest payments is different from the
potential investor's currency;
(d)
understands thoroughly the terms of the Notes and is familiar with the behaviour of financial
markets; and
(e)
is able to evaluate possible scenarios for economic, interest rate and other factors that may affect
its investment and its ability to bear the applicable risks.
Stabilisation
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the
Stabilisation Manager(s) (or persons acting on behalf of any Stabilisation Manager(s)) in the
applicable Pricing Supplement may over allot Notes or effect transactions with a view to supporting
the market price of the Notes at a level higher than that which might otherwise prevail. However,
stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on
which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made
and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the
issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the
relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the
relevant Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager(s)) in
accordance with all applicable laws and rules.
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FORWARD-LOOKING STATEMENTS
This Offering Circular includes forward-looking statements. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms "believe," "estimate,"
"anticipate," "expect," "forecast," "foresee," "aim," "intend," "may," "plan," "project," "seek," "should,"
"will," "would" or, in each case, similar expressions or the negative thereof, or other variations or
comparable terminology. These forward-looking statements include all matters that are not historical
facts. Such forward-looking statements are necessarily dependent on assumptions, data or methods that
may be incorrect or imprecise and that may be incapable of being realised. They appear in a number of
places throughout this Offering Circular and include statements regarding the Issuer's, the Guarantor's or
the Group's intentions, beliefs or current expectations concerning, among other things, statements relating
to:
·
the Group's strategy, including statements relating to the next phase in its transformation and its
next generation of cars, outlook and growth prospects;
·
the Group's operational and financial targets and its medium-term and long-term annual sales
goals;
·
the Group's liquidity, capital resources, capital expenditures and access to funding, or statements
relating to pending or contemplated refinancings or capital-raising efforts;
·
the Group's planned investments;
·
the Group's plans for future operations and facilities;
·
expectations as to future demand for the Group's cars;
·
general global economic trends and trends in the automotive industry and the premium passenger
car segment in particular;
·
the impact of regulations and laws on the Group and its operations; and
·
the competitive environment in which the Group operates.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other
factors because they relate to events and depend on circumstances that may or may not occur in the
future. Each of the Issuer and the Guarantor cautions prospective investors that forward-looking
statements are not guarantees of future performance and that the actual results of the Group's operations,
including its financial condition and liquidity, and the development of the Group's industry may differ
materially from those made in or suggested by the forward-looking statements contained in this Offering
Circular. In addition, even if the Group's results of operations, financial condition and liquidity, and the
development of the Group's industry are consistent with the forward-looking statements contained in this
Offering Circular, those results or developments may not be indicative of results or developments in
subsequent periods. Factors that could cause these differences include, but are not limited to:
·
changes in international, national and local economic, political, regulatory, business, industry,
labour and social conditions;
·
changes in underlying customer behaviour, including changes in customer buying trends and
patterns, customer preference and demand and consumer purchasing power;
·
competition in the markets in which the Group operates;
·
changes in laws, regulations and governmental policies, including tax law and fiscal policy;
·
the Group's ability to successfully develop and implement new products, designs, technologies
and innovations;
·
changes in technology and automotive trends;
·
the Group's ability to forecast customer trends and preferences and demand for its cars;
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·
the availability and cost of consumer financing for cars;
·
changes in the availability and cost of suppliers, raw materials and key inputs;
·
disruptions to the Group's facilities;
·
fluctuations in currency exchange rates;
·
developments relating to product liability, warranties and recalls with respect to the Group's cars;
·
the Group's ability to protect intellectual property;
·
the Group's ability to generate the funds needed to service its debt and receive external financing;
·
changes regarding the Group's brand reputation and brand image;
·
changes in the Group's business strategy, development and investment plans;
·
announcements by the Group's competitors and others as to regulatory and similar matters,
compliance with regulations, exposures to litigation and other matters of similar nature which
may cause capital markets to downgrade investments in the Group's industry; and
·
costs associated with ensuring the Group's facilities meet the requirements of applicable
environmental, health and safety laws.
Although the Issuer and the Guarantor believe the expectations reflected in any forward-looking
statement are reasonable, the Issuer and the Guarantor cannot give any assurance that they will
materialise or prove to be correct.
The Issuer and the Guarantor urge prospective investors to read "Risk Factors" and "Business" sections
for a more complete discussion of the factors that could affect the Issuer's and the Guarantor's future
performance, their industry and related regulation thereof. In light of these risks, uncertainties and
assumptions, the events described or suggested by the forward-looking statements in this Offering
Circular may not occur.
These forward looking statements speak only as of the date on which the statements were made. Except
as required by law or applicable stock exchange rules or regulations, the Issuer and the Guarantor
undertake no obligation to update or revise publicly any forward looking statement, whether as a result of
new information, future events or otherwise. All subsequent written and oral forward looking statements
attributable to the Issuer or the Guarantor or to persons acting on their behalf are expressly qualified in
their entirety by the cautionary statements referred to above and contained elsewhere in this Offering
Circular.
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RISK FACTORS
Any investment in the Notes is subject to a number of risks. Prior to investing in the Notes issued under
the Programme, prospective investors should carefully consider risk factors associated with any
investment in any Notes, the business of the Issuer, the Guarantor and/or the Group and the industry in
which it operates together with all other information contained in this Offering Circular, including, in
particular the risk factors described below. Words and expressions defined in the "Terms and Conditions
of the Notes" below or elsewhere in this Offering Circular have the same meanings in this section.
The following should be used as guidance only but are the material risks that the Issuer and Guarantor
believes to be the most relevant to an assessment by a prospective investor of whether to consider an
investment in Notes issued under the Programme. Additional risks and uncertainties relating to the
Issuer, the Guarantor and/or the Group that are not currently known to the Issuer or Guarantor at the
date of this Offering Circular, or that it currently deems immaterial as at such date, may individually or
cumulatively also have a material adverse effect on the business, prospects, results of operations and/or
financial position of the Issuer the Guarantor and/or the Group and, if any such risk should occur, the
price of the Notes may decline and investors could lose all or part of their investment. Investors should
consider carefully whether an investment in Notes issued under the Programme is suitable for them in
light of the information in this Offering Circular and their personal circumstances.
This Offering Circular also contains forward-looking statements that involve risks and uncertainties. The
actual results of the Group may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including the risks described below and elsewhere in this
Offering Circular (see "Forward-Looking Statements").
Risks Associated with the Automotive Industry
Global economic conditions could have a material adverse effect on the Group's sales and results of
operations.
The automotive industry depends on general economic conditions around the world. Economic
slowdowns in the past have significantly affected the automotive and related industries. Demand for
automobiles is influenced by a variety of factors, including, among other things, the growth rate of the
global economy, currency fluctuations, availability of credit, disposable income of consumers, consumer
sentiment, GDP growth, unemployment levels, interest rates, environmental policies, tax policies and
duties, safety regulations, freight rates vehicle and fuel prices as well as input prices on raw materials,
commodities and supplies.
The Group's business is mainly focused on the Western European, Chinese and American markets.
Economic conditions in each of these markets can vary greatly, and are subject to changes from diverse
and different causes. As such, the Group's profitability can be adversely affected by market dynamics in
any of these regions. In the Group's main markets, economic conditions have been impacted by various
geopolitical and other events. In Western Europe, limited economic growth coupled with uncertainty
about the future relationship between the United Kingdom and the European Union and the impact of
geopolitical conflicts may have a negative impact on demand. An economic slowdown in the People's
Republic of China and stock market volatility may impact demand for the Group's cars and services in
China and wider Asia. As a result of the above and other future economic and political events, demand
for cars in general, or the Group's cars in particular, may be materially adversely affected.
Changes in global conditions regarding tariffs and trade tax could have a material adverse effect on
the Group's sales and results of operations
In March 2018, the United States imposed increased tariffs on imported steel and aluminium, two
important raw materials in the Group's car production. In May 2018, the Group opened its manufacturing
operations in the Charleston plant in South Carolina, United States, but a substantial amount of its offered
cars in the United States will continue to be produced outside of, and exported to, the United States. The
steel used in the Group's operations in the Charleston plant will mainly be sourced from outside the
United States. The U.S. tariffs on imported steel and aluminium have already increased, and will in the
future continue to increase, which will increase the Group's production costs in the U.S. Any other tariffs
on cars, parts and components imported to the United States will also increase exporting costs in relation
to cars, parts and components exported to the United States. The Group may be required produce a higher
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number of car models locally and build plants in several markets where the Group offer its cars, which
would increase costs and lead to additional capital expenditures and may require the Group to amend its
organisational governance and shift personnel capacity and production of a certain car model from one
plant to another. Finally, several automotive original equipment manufacturers ("OEMs") have lowered
their outlooks and expectations for 2018 due to the tariffs and the uncertainties of the outcome of trade
negotiations between the United States and China. Accordingly, the tariffs may have a material adverse
effect both on the automotive industry in general and on the Group's business, results of operations and
financial condition.
Furthermore, as a response to the U.S. tariff measures, the EU and China, for example, have imposed
tariffs on some U.S. products. Any further tariff measures imposed on cars, raw materials or products that
are important in the Group's operations, may lead to higher prices on cars or the raw material or product
in question, which the Group may be unable to pass on to consumers. Even though the impacts of any
further tariff measures are uncertain, escalated trade barriers may affect the whole car industry as well as
world economic and key economic factors, such as GDP growth rates, employment levels, interest rates
and inflation in a negative manner. Deterioration in such key economic factors, as well as the reduced
availability of financing for cars at competitive rates, may result in a decrease in demand for automobiles.
A decrease in demand would, in turn, cause automobile prices and manufacturing capacity utilisation
rates to fall. Such circumstances have in the past had, and may in the future have, a material adverse
effect on the Group's business, results of operations and financial condition.
A decline in retail consumers' purchasing power or consumer confidence, or in corporate consumers'
financial condition and willingness to invest could have a negative impact on demand for the Group's
cars.
Demand for cars for personal use generally depends on consumers' net purchasing power, their
confidence in future economic developments and changes in fashion and trends, while demand for cars
for commercial use by corporate consumers primarily depends on the consumers' financial condition,
their willingness to invest (motivated by expected future business prospects) and available financing. A
decrease in potential consumers' disposable income or their financial flexibility will generally have a
negative impact on demand for the Group's products.
A weak macroeconomic environment, restrictive lending, higher interest rates and/or a low level of
consumer sentiment generally, may reduce consumers' net purchasing power and lead existing and
potential consumers to refrain from purchasing a new car, defer a purchase further or purchase a smaller
model with fewer specifications at a lower price. A deteriorating macroeconomic environment may lead
to reluctance by corporate consumers to invest in cars for commercial use and/or to lease cars and thereby
lead to a postponement of fleet renewal contracts.
To stimulate demand, the automotive industry has offered consumers and dealers price reductions on cars
and services, which has led to increased price pressures and sharpened competition within the industry.
As a provider of numerous car models, sold in high volumes, the Group's profitability and cash flows are
significantly affected by the risk of rising competition and price pressures. Special sales incentives and
increased price pressures in the new car business could also influence price levels in the used car market,
with a negative effect on car resale values as prices in the used car market decrease in line with price
decreases for new cars. The Group is exposed to the used car market in relation to the Group's
subscription service "Care by Volvo" and its global mobility service "Volvo Car Mobility" (
).
Accordingly, sales incentives and increased price pressures may expose the Group to the risk that the
market value of used cars declines below their residual value, which may have a material adverse effect
on the Group's business, results of operations and financial condition. For further information on the risks
relating to residual value, please refer to "the Group is exposed to residual value risks in the course of its
operations" below.
Intensifying competition could adversely affect the Group's sales and results of operations.
The global automotive industry, including the premium car segment in which the Group operates, is
highly competitive and competition is likely to further intensify. A range of factors affect the competitive
environment, including, among others, design, quality and features of cars and related services,
innovation, safety, development time, time to market, ability to control costs, pricing, reliability, fuel
economy, environmental impact and perception thereof, consumer service and financing terms. Due to the
rapid technological change in the industry allowing for the introduction of alternative ownership models
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