Swedish Auto Industry Gets $3.5 Billion Aid Package

Dec. 11, 2008
The $3.5 billion package will take the form of increased investment in research and development and state credit guarantees for raising loans from the European Investment Bank

The Swedish government on Dec. 11 announced a 28-billion-kronor (US$ 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.

The announcement came just hours after the U.S. House of Representatives approved a $14 billion lifeline for the auto industry. The Swedish government, which had previously said it would await a U.S. decision on a rescue package before announcing any measures, reiterated it would not take over the struggling Swedish car makers. Volvo Cars is owned by Ford while Saab Automobile is owned by General Motors.

The three-part package includes state credit guarantees totaling a maximum of 20 billion kronor "to companies in the automotive cluster for raising loans in the European Investment Bank for conversion to green technology." The government will also provide three billion kronor for the creation of a state-owned 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, though no date for that was disclosed.

"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.

Enterprise and Energy Minister Maud Olofsson stressed the need for "renewal" in the sector towards environmentally-friendly cars. "We need a long-term perspective. We intend to still have a car industry in Sweden in 20 years," she said. Sweden had previously announced that it would increase its research and development subsidies to 450 million kronor (US$55 million) annually for 2009-2012, up from 430 million kronor this year, in an effort to support the industry.

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

Copyright Agence France-Presse, 2008

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