Swedish auto industry gets 2.65 billion euro aid package

Swedish auto industry gets 2.65 billion euro aid package

Stockholm: The Swedish government on Thursday announced a 28-billion-kronor (2.65-billion-euro, $3.5-billion) package to help the country’s beleaguered automotive sector, including carmakers Volvo and Saab.

The measures “will take the form of increased investment in research and development and state credit guarantees for raising loans (from) the European Investment Bank," the government said in a statement.

The announcement came just hours after the US House of Representatives approved a $14-billion lifeline for the teetering US auto industry.

Volvo Cars is owned by struggling US automaker Ford while Saab Automobile is owned by General Motors which has warned it could run out of money in the next few months without state aid.

The government, which had previously said it would await a US decision on a rescue package before announcing any measures, reiterated it would not take over the struggling Swedish companies.

“We should not own companies," Finance Minister Anders Borg stressed.

But, “with the financial woes that we have, we must meet the concerns in the car industry ... and create conditions for them to be able to operate on the market," he added.

The car industry accounts for 15% of Sweden’s exports and, with some 700 companies and suppliers, employs about 140,000 people.

The three-part Swedish package unveiled Thursday includes state credit guarantees totalling a maximum of 20 billion kronor “to companies in the automotive cluster for raising loans (from) the European Investment Bank for conversion to green technology."

The government will also provide three billion kronor for the creation of a limited company to conduct research and development in the automotive sector.

Finally, the government will provide rescue loans of up to five billion kronor for companies in the sector “that find themselves in financial crisis."

The proposal will be presented to parliament for approval, although no date for that was disclosed. The government proposed that all three parts of the package enter into force on the same day parliament approves the bill.