(April 3): When Geely listed Volvo Car AB in 2021, Li Shufu hailed the turnaround of the “tiger” that he’d bought 11 years earlier, and said the job now was to “give that tiger wings”.

But Volvo failed to take off, instead losing two-thirds of its value since the Stockholm IPO. With US President Donald Trump’s 25% auto tariffs set to pile on further pressure, investors are now seeking a less cryptic answer to how the Chinese billionaire plans to revive the automaker when he faces them for the first time at a shareholder meeting on Thursday.

“Li Shufu needs to respond to our questions,” Joacim Olsson, chief executive officer of the Swedish Shareholders’ Association lobby group, said in an interview. “What is the strategic direction for the company to grow profitably and contribute to higher value for shareholders?” 

Li’s rare appearance at the annual general meeting in Gothenburg, Sweden comes at a key time for Volvo. The company is grappling with disappointing sales, model delays and even faces the threat of a sales ban in the US. Li this week brought back former CEO Hakan Samuelsson to take the helm once again, replacing Jim Rowan who oversaw a 66% slump in the share price during his three years in charge. Now, the billionaire must convince almost 170,000 minority investors that Volvo has a plan to turn things around.

Geely bought Volvo, known for its safety after inventing the three-point seatbelt, from Ford Motor Co for US$1.8 billion (RM7.98 billion) back in 2010. At the time, it was the largest takeover by a Chinese company of a foreign automaker. Since then, Li has gone on to build an empire that now includes Polestar Automotive Holding, Lotus Technology Inc and Zeekr.

But Li is under pressure. His Chinese brand Geely Automobile is trying to catch up with electric-vehicle (EV) leader BYD Co, while Polestar and Lotus have been reduced to penny stocks in New York.

Li made it clear in a recent strategy shift that his carmakers, including Volvo, need to forge closer ties as he seeks synergies across the group. 

That may mean Volvo returns to working more closely with its Geely siblings, including Polestar, the struggling EV company that it established but spun out and listed separately in 2022.

Like other European automakers, Volvo is suffering from waning consumer demand for EVs, which tend to cost more than their combustion-engine equivalents. In Rowan’s last set of earnings in February, Volvo warned that it would struggle to match its 2024 sales this year. Volvo’s car sales fell 10% year in March from a year earlier, the company said Wednesday, with fully electric sales tumbling 26%.

Geely has a controlling stake in Volvo, owning more than three-quarters of the stock, which has been a target for short sellers.

Its ownership has come with problems. Volvo faces the threat of a sales ban in the US due to its Chinese ties. 

Rowan said in February that the automaker was sending a delegation to Washington to navigate the new regulation, which would stop sales of cars if they have systems or software designed or produced by Chinese entities. To counter this, Geely may have to reduce its 79% stake in Volvo, cauterise its US operations or convince the Trump administration it isn’t a security threat.

Trump’s additional 25% tariffs on auto imports will be a more immediate concern, however. While it has a factory in South Carolina, Volvo still exports a significant share of vehicles from Europe. 

Rowan said in February that if the US imposes tariffs, Volvo will have to reassess the economics of producing the EX30 and other models in Europe. 

The return of Samuelsson, 74, on a two-year mandate suggests Volvo is “stepping up crisis management to protect liquidity,” Jefferies analysts said in a note this week.

Samuelsson helped change people’s perception of Volvo as a global premium brand, according to Bloomberg Intelligence analyst Giacomo Reghelin. Now, he needs to rebuild that image and focus on boosting profitability, he said. 

Li has tended to avoid the limelight, only appearing so far at AGMs with video messages for investors. This distanced approach has drawn the ire of shareholder groups such as the Swedish Shareholders’ Association. 

Another advisory group, ISS, said last month it didn’t support re-electing Li to the board due to his repeated absence from meetings, without explanation. Geely declined to comment ahead of the AGM. Volvo said it was aware of the criticism, adding that Li was an active chairman who is fully engaged with the company’s affairs.

“Now that he has decided to show up, we are no longer saying categorically no to his re-election,” said Olsson from the Swedish Shareholders’ Association. “But we want answers.”

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