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Sweden promises €445 million in loan guarantees to Volvo

 
3 2,156 views Feb 24, 2009
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volvo drive geneva additions 006

2009 volvo s60 concept 001

2009 volvo s60 concept 001

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The solipsism of American media has a way of quietly filtering out much of the rest of the world, but the car industry is in a pinch just about everywhere. Nowhere is that picture clearer than in Sweden where ailing carmakers Saab and Volvo have been seeking government aid for months.

Today word that the Swedish government is willing to back €445 million ($572 million) in loan guarantees for Volvo emerged, though rival and compatriot Saab is still without aid.

Why would the Swedes treat their two brands so differently? Parentage. Ford has pledged its willingness to take full responsibility and to guarantee capital flows to Volvo, Swedish state secretary Joran Hagglund told Autmotive News.

General Motors, on the other hand, made no such vow and has let Saab go its own way. The company has since filed for reorganization to help it separate from GM's corporate structure.

There's a catch on Volvo's government-secured loans, however: 10% of the funds must be secured by private creditors. Convincing market participants that the company is still viable enough to repay what it borrows is no small hurdle.

Still, given the relatively strong global position of Ford and the company's commitment to back its Swedish brand, the private financing is likely to come through, and therefore so are the government loan guarantees.

Volvo has made several strides toward improving its relevance lately, adding several models to its efficient DRIVe line of vehicles and offering dramatic, if controversial, new concepts such as the S60 (pictured).
Volvo DRIVe Concepts
2009 Volvo S60 Concept

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HI-RES GALLERY: 2009 volvo s60 concept preview 002




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Comments (3)

  1. ma_NoNameDenton avatar NoNameDenton Posted: 2/25/2009 11:27am PST

    I thought Ford was ditching Volvo, didn't they want 6 billion for it
     
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  2. ma_saabfan avatar saabfan Posted: 2/25/2009 12:11pm PST

    Ford CEO also said he will be paid $1 but now taking a 30% cut instead.
     
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  3. ma_NoNameDenton avatar NoNameDenton Posted: 2/25/2009 6:25pm PST

    Ford CEO also said he will be paid $1 but now taking a 30% cut instead.

    Anyone actually believe he was going to do the one dollar salary?
     
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