December 11, 2008 / 11:16 AM / 9 years ago

Sweden unveils auto aid; no stake buys planned

STOCKHOLM (Reuters) - Sweden said on Thursday it would provide up to 25 billion Swedish crowns ($3.10 billion) in credit guarantees and emergency loans to its ailing auto industry but had no plans to buy stakes in Volvo or Saab.

Both companies have been lined up for sale by their U.S. parents, respectively Ford Motor Co and General Motors Corp, which are facing a fight for survival on the front line of a devastating market downturn.

The center-right government said in a statement it would provide up to 20 billion crowns in collateral-backed credit guarantees, directed toward the manufacture of more emissions-friendly vehicles, as well as “rescue” loans of up to 5 billion crowns.

“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.

The aid package came after the U.S. House of Representatives late on Wednesday approved legislation to lend up to $14 billion to GM, Ford and Chrysler LLC, though the bill’s prospects in the Senate looked uncertain.

Ford and GM had both held talks with the Swedish government over possible support for their struggling local units.

Sweden also pledged to spend 3 billion crowns on automotive research and development through a new state-owned firm.

“We have with these three measures found a structure which allows us, with great responsibility for public finances, to lay the groundwork for solving the real problems of the automotive industry,” Finance Minister Anders Borg told a news conference.

The U.S. bailout proposal would extend taxpayer-funded loans or lines of credit to the three U.S. carmakers and create a federal government post of “car czar” to oversee the industry.

Reporting by Johan Sennero, Niklas Pollard and Anna Ringstrom; editing by John Stonestreet

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