After bailout talks with the Swedish government broke down, Volvo Cars has turned to the Belgian government for its help in securing a loan from the European Investment Bank (EIB). The best-known Swedish carmaker may be owned by the American company Ford, but it had hoped to win loan guarantees from Stockholm for the EUR 200 million the EIB is prepared to give it.
When the Swedish authorities backed out of negotiations, Volvo turned to Belgium since it has a factory in the city of Ghent. Volvo’s CEO, Stephen Odell, told the Swedish business daily Dagens Industri that his company will now ask the Belgian government to support their loan application to the EIB.
In a subtle jab at the Swedish government, Odell suggested that new models of Volvo cars could end up being built in the country that backs his loan application. “It is clear that a loan guarantee from Belgium could affect our future decisions on the location of production and product development,” he stated.
The EIB has allocated Volvo EUR 200 million of a total bailout fund of EUR 3 billion to help European carmakers. But Volvo can’t get the money unless it can find a government backer to guarantee the loan.
Although Odell emphasised that Volvo’s DNA is unquestionably Swedish, he added, “The opportunities in Belgium are greater in the short term. They also have a more flexible system that increases capacity to retain more employees.”