Volvo Loan Talks Postponed

The leader of the union representing workers in Sweden’s car industry has blasted the government and bosses of Volvo cars, the Swedish subsidiary of Ford, after the two parties broke off talks on a state guarantee for a loan from the European Investment Bank.

IF Metall leader Stefan Löfven said that it was ”unacceptable” that talks had been put on ice. ”The government and the company bosses are playing a high risk game that weakens Volvo’s long term future,” Löfven said.

Volvo cars which has its main base in Gothenburg, said in a statement that the decision was reached ”jointly” and said that the move was ”principally in consideration of Ford’s stategic review which could lead to a sale of Volvo cars.”

A senior government official said that Ford is in a an very intensive sales process right now and this isn’t consistent with the government’s long term perspective.

It’s understood that Ford is seeking about two billion dollars for Volvo, less than a third of what it paid for it a decade ago.

In March, the European Investment Bank approved loans of 200 million euros for Volvo cars, subject to a Swedish state guarantee. The loans had been planned to give financial backing to green technology projects.

Volvo cars Chief Executive Stephen Odell said ” We are disappointed that we have not been able to come to an agreement,” and added that their competitors ”have been able to utilise similar EIB loans which clearly give them competitive advantage during these difficult times.”

Meanwhile Swedish manufacturers saw tentative signs that the large drop in market demand may be bottoming out with industrial orders up in March from february.