In the latest moves to prop up Europe’s ailing car industry Sweden is to provide 2.5 billion euros in credit guarantees and emergency loans to Volvo and Saab. But the Stockholm government said it will not buy stakes in the companies. The bulk of the government money will be to support the development of more fuel-efficient vehicles. The Finance Minister Anders Borg said: “The funds will ensure local manufacturing research and development projects, as well as production, remain in Sweden.
Ford and General Motors have both held talks with the Swedish government over possible support for their struggling local units. Ford wants to sell Volvo and GM is keen to offload Saab as the US parent companies try to survive in the face of slumping sales. In Germany, workers at some Daimler plants have already started an extended Christmas holiday with other manufacturers following suit and the industry is fearful. Willi Diez, an analyst from Germany’s Institute for Automobile Economics, said: “You can’t rule out any scenario in the car market. It could be that the crisis lasts long into 2009 and then they’d have to make further production adjustments which raises risks to employment.” In Spain car sales have collapsed and Renault workers – also facing long closures of plants in the new year – demonstrated against production cuts and possible lay offs. Spanish car workers are in a weak position as their wages are above the European average.