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S&P Global Ratings assigns BBB- rating to Volvo Cars parent Zhejiang Geely

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S&P Global Ratings assigns BBB- rating to Volvo Cars parent Zhejiang Geely

S&P Global Ratings on March 19 assigned a BBB- long-term issuer credit rating to Chinese carmaker Zhejiang Geely Holding Group Co. Ltd., the owner of Hong Kong-listed Geely Automobile Holdings Ltd. and Swedish luxury carmaker Volvo Car AB.

The ratings agency said the rating reflects its view that Zhejiang Geely will continue to strengthen its position in the global and Chinese automotive industry over the next 12 to 24 months.

Ratings said the company could also improve its groupwide competitive position, supported by sustained technology improvement, strong product pipeline, platform synergy, and successful marketing and sales execution of its major subsidiaries, Geely, Volvo and Lynk & Co.

Ratings predicts that Geely Auto's new models in 2019 to 2020 will continue to have strong visual appeal and good product design, as they did from 2017 to 2018.

The ratings agency added that Volvo Car's strong market position could help solidify Zhejiang Geely's standing in the higher-end spectrum of the auto market.

The ratings outlook on the group is stable, reflecting Ratings' view that Zhejiang Geely will continue to gradually grow its auto market share, revenue and profit, while maintaining moderate leverage over the next 12 months to 24 months.

Ratings said it could raise its rating on the company if the group can significantly strengthen its product competitiveness, leading to a material increase in market share in the Chinese and global passenger vehicle markets.

Conversely, the agency said it may also lower the rating if the group's debt-to-EBITDA ratio increases to and consistently stays at or above 2x, with no increase in sales volume.

Zhejiang Geely also owns car brands Polestar, Proton Holdings Bhd. Lotus Cars Ltd.; and U.S.-based Terrafugia Inc., which develops flying cars.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.