Sweden decided on Wednesday to give a state guarantee for a loan worth 3,55 billion crowns ($521 million) to Volvo Cars, owned by China’s Zhejiang Geely Holding Corp, from the European Investment Bank (EIB).
The government said in a statement that the EIB loan was aimed at helping Volvo, which was bought by Geely from Ford, to develop competitive, environmentally friendly cars.
“At the same time, this builds long-term conditions for Volvo’s operations and jobs in Sweden,” Economy Minister Maud Olofsson said in a statement
Zhejian Geely, parent of Hong Kong-listed Geely Automobile, completed the purchase of Volvo in August, paying $1,3 billion in cash and issuing Ford a $200 million note.
The deal was the biggest overseas takeover by a Chinese company in the automotive sector.
Sweden’s other main car producer, Saab, was also sold in the aftermath of the global crisis, with General Motors selling it to Dutch sports car maker Spyker. ($1=6,813 Swedish Crown).