Volvo shares: Price analysis before buying or selling

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ISIN code: SE0000115420

Ticker: STO: VOLV-B

Index or market: LSE

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Elements to consider before selling or buying Volvo shares

Analysis N°1

First of all, you'll obviously follow the evolution of the global automotive market as well as that of trucks and the fluctuations in demand.

Analysis N°2

The various partnerships and alliances that Volvo could set up in the future are also important because they will allow the group to gain in productivity and/or visibility and reach new markets.

Analysis N°3

Developments in the level of wages and purchasing power in the countries in which Volvo markets its vehicles will be important in determining and anticipating demand.

Analysis N°4

All the innovations made by Volvo in the hybrid vehicle segment in particular or in autonomous vehicles are also indicators of choice and can boost the group's activity.

Analysis N°5

You should of course follow the increasingly strong competition from large international groups which may affect Volvo's sales or reduce its market share.

Analysis N°6

Finally, rising fuel prices can also be a curb on sales in this sector.

Analysis before buying or selling Volvo shares

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General presentation of Volvo

To understand how the Volvo Group can accelerate its growth in the coming years, it is essential to understand who it is and what its main activities and sources of revenue are. This is what we're going to tell you now with a comprehensive overview of the company:

The Volvo Group is a Swedish company involved in truck manufacturing. More precisely, the group is currently the world's number two in this sector.

In order to better understand the activities carried out by Volvo, it is possible to divide them into several divisions according to the share of turnover they generate and in this way:

Firstly, the sale of trucks alone accounts for more than 64.2% of the company's turnover with 242,400 vehicles sold in 2011 under the Volvo, Renault, UD, Eicher and Mack brands.
Construction equipment sales account for the next largest share, with 20.8% of sales of excavators, loaders, backhoes, hydraulic excavators, graders and dumpers.
Sales of buses and chassis account for 7.2% of turnover and Volvo is the world's second largest manufacturer.
The sale of marine and industrial engines, parts and control systems generates 2.8% of turnover and is aimed at cruise ships and commercial vessels and industrial applications such as irrigation units, forklift trucks and power generators.
The sale of aircraft and gas turbine components and engines generates 2.1% of turnover.
Finally, the remaining 2.9% of turnover comes from ancillary activities.

Geographically, the Volvo Group generates 38.9% of its turnover in Europe, 23.7% in Asia, 19.5% in North America, 11.3% in South America and 6.6% in the rest of the world.

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The major competitors of Volvo

To better understand the economic environment in which the Volvo Group currently operates, it is necessary to also take an interest in the Group's competitors. This is what we are proposing now with a quick presentation of its main opponents:

Stellantis

The multinational automotive group Stellantis is of course a serious competitor of Volvo. It is the result of the merger between the PSA Group and the Fiat Chrysler Group in 2021. This new automotive giant operates and markets fourteen car brands, five from PSA with Citroën, DS, Opel, Peugeot and Vauxhall and nine from Fiat Chrysler with Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati and RAM.

Toyota

The Japanese Toyota Group is a major car manufacturer, as it is the leader in this sector in terms of financial performance. It even posted the highest stock market valuation in the sector in 2017 before being overtaken by Volkswagen and then by Tesla. It should also be noted that the Toyota group created a production system that gave rise to the concept of toyotism.

Volkswagen

There is of course also competition from the Volkswagen Group, a German car manufacturer. This company was originally created by the German labour front and the Volkswagen AG group has over time become one of the largest vehicle producers worldwide in terms of units sold.

General Motors

The GM Group or General Motors Corporation is an American car manufacturer based in Michigan, Detroit. The group is responsible for nearly fifteen brands of motor vehicles and was founded in 1908. It went on to become the world's largest car manufacturer between 1931 and 2005 and in 2011.

Caterpillar

Finally, and in a different field, and more specifically in the agricultural and construction machinery sector, Volvo's biggest competitor is none other than Caterpillar Inc. This is an American industrial group that manufactures machinery in various fields such as construction, mining and forestry, including bulldozers, wheel loaders, hydraulic excavators, graders, scrapers, diesel engines and generators. The group also markets related products such as shoes, bags, clothing, off-road smartphones and others.

The major partners of Volvo

To finish this article, you can review the main partnerships established by the Volvo group in recent years.

Allianz

In 2013, Volvo signed a partnership with the insurer Allianz France on automobile insurance for customers of the Volvo network.

Microsoft

In 2015, the Volvo group signed a strategic partnership with Microsoft to jointly develop an augmented reality headset allowing customers to visualize their future vehicle before making a purchase.

Autoliv

In 2016, the Volvo group created a partnership with the American group Autoliv, specializing in automotive safety systems, to create a software joint venture for autonomous vehicles.

Google

In 2017, Volvo partnered with Google to integrate the Android operating system into its Sensus navigation system.

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The factors in favour of a rise in the Volvo share price:

First of all, you'll notice the significant diversification of the products offered by Volvo. This group, which operates in six different segments including heavy goods vehicles, construction machinery, customer services, buses, cars and Volvo Penta, doesn't just protect itself against the risks associated with a single specific sector but also allows it to reach a more diversified clientele and therefore expand its sources of income.

Another strong point of the group is its particularly solid market positions in certain segments. The Volvo Group is the leader in certain segments in which it operates and on an international scale. This particularly involves the heavy-duty segment with a very large market share of more than 20% in almost all developed countries. This also applies to the bus and construction equipment sector in which the Volvo Group remains a major player around the world. Finally, this also involves the marine and industrial engine market, with market shares also very valuable for the Volvo Company.

Remaining on Volvo's qualities and strengths, you can also take into account the worldwide expansion of the company which has been a great success. The Volvo Group is able to occupy a prominent place in the international market thanks to its well thought-out and proven expansion strategy. It has succeeded in establishing a lasting foothold in many developed countries and in emerging countries with the acquisition of a significant market share in several segments. As a result, Volvo currently markets its products in Europe, North America, Africa, Asia and Australia.

The last strong point of this company that we can point out here are the research and development capacities at its disposal. The Volvo group invests a lot in the research and development segment and this capacity for innovation gives it a real advantage over the competition and to stay ahead in its sector of activity.

The factors in favour of a drop in the Volvo share price:

First of all, with regard to one of Volvo's two major weaknesses, is the recall of certain products which had the direct effect of impacting the company's brand image. The case we are talking about here took place in 2015 when the group found itself obligated to recall various products, which of course damaged its brand image. That year, the group had to recall the Volvo Trucks from the 2014 and 2015 VNL models particularly due to a panel defect they had. Although this affair took place a few years ago, it still has some repercussions on the current sales of the group which relies on more precautions so that this situation never recur in the future.

Finally, the second and last weak point of the company is the level of its margins, which is down slightly. Investors are closely monitoring the financial results of the company which have shown operating margins and net margins declining in recent years, regardless of the group's revenues, which have continued to grow. The fact that Volvo's margins are falling has of course a direct negative impact on shareholders and is therefore not without consequences for the evolution of the share price of this stock. Therefore, it is important to bear this in mind when analysing and forecasting medium and long term trends.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What are the key dates in Volvo's history?

As part of your historical analysis of Volvo shares and the company's growth in the industry, there are several important dates to be aware of. The company was founded in 1927. In 1958, the group invented the modern seat belt. In 1978, the Volvo Car Corporation was established. In 1999, the company was acquired by the Ford Group. Then, in 2010, it was taken over by the Chinese group Geely.

Where are Volvo's production facilities based?

Volvo vehicles are mainly produced in Sweden, Belgium, China and the United States with assembly in India and Malaysia. The group also has research and development units in Sweden, the US and Shanghai, and design offices in the US. The majority of the group's employees are still employed in Europe, with a large proportion in Sweden.

Where can I find Volvo Group results and news?

To find out about the Volvo Group's annual or quarterly financial results, you can go directly to the company's website in the investor section. You will also find information about the company's past and future events and news highlights. This gives you all the data you need for fundamental and financial analysis.

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Analysis before buying or selling Volvo shares