Thursday, December 11, 2008

Sweden offers $3.4 billion auto bailout

The Swedish government presented a $3.4 billion support package Thursday to help the nation's ailing auto industry.

The plan offers credit guarantees, emergency loans and research funds to boost companies in the "Swedish automotive cluster," the center-right government said.

Car makers Volvo (VOLV.Y) and Saab have been appealing to the government for support because of the financial woes of their U.S. owners, Ford and General Motors.

The Swedish plan, which requires approval from lawmakers, was announced just hours after the U.S. House of Representatives approved a bill to get $14 billion in emergency loans to the struggling U.S. auto industry.

Democrats and the White House hoped the bill could be enacted by week's end, but it is jeopardized by opposition from Republicans in the Senate.

The Swedish government said its support package was needed to safeguard "the continued success of the Swedish automotive industry," even if the industry's crisis deepens. It also called for quicker development of green technology.

The plan includes a maximum of 20 billion kronor in credit guarantees to automotive companies, and up to 5 billion kronor in rescue loans to bail out companies in crisis. The government said it would also earmark 3 billion kronor for research and development in the automotive sector.

The four-party coalition reiterated it was not interested in ownership in Volvo and Saab, which are expected to be put up for sale as Ford (F, Fortune 500) and GM (GM, Fortune 500) focus on their U.S. brands.

"The measures will be taken with the clear assumption that the state does not intend to acquire any of the existing automotive manufacturers," the government said in a statement. "They are also based on continued openness in relation to the ongoing process in the U.S. automotive industry and conclusions drawn by current or any new owners."

The government said the plan was in line with the proposals in the European Commission's economic recovery plan.

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