Göteborg, Sweden – Volvo Car Corporation and the Swedish government have agreed to put negotiations on hold regarding a state guarantee of loans to Volvo Cars from the European Investment Bank (EIB). The two sides reached the position jointly due to Ford’s strategic review, which could lead to the Swedish automaker being sold.
In December 2008, the European Union approved €16 billion for four years to the EIB to lend to the European automotive industry in support of green technologies. In March 2009, the EIB approved loans to Volvo, subject to the availability of a state guarantee.
The loans were planned to provide financing to support projects related to environmental technologies, which are currently ongoing at Volvo Cars.
“We have had a constructive dialogue with the Swedish government and they have been very supportive of Volvo Cars’ business case all along,” said Stephen Odell, president and CEO of Volvo Car Corporation. “We are disappointed that we have not been able to come to an agreement. Our competitors in other markets like Italy, Germany, France and U.K. have been able to utilize similar EIB loans which clearly give them competitive advantage during these difficult times.”
Volvo said it will focus on realizing other governmental initiatives to support its business, including market stimulation packages, R&D funding, support to distressed suppliers and competence development, although very little of this has been put in place so far.