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Ford and GM seek Swedish aid: report

Ford and General Motors (GM) have asked the Swedish government for financial assistance in an attempt to improve the finances of Volvo and Saab ahead of the anticipated sale of the two brands.

Ford and GM seek Swedish aid: report

The Financial Times (FT) newspaper reported on Monday that Stephen Odell, the head of Ford-owned Volvo Cars, and Jan-Åke Jonsson , managing director of GM-owned Saab Automobile, have both approached Sweden’s enterprise minister Maud Olofsson to discuss the matter.

The Swedish government is mulling a support package totaling around 2 billion kronor ($248m) in loans and aid for the two car makers, the newspaper reports.

“The car industry in Sweden is of importance for the country as a whole, and they are open to the idea,” Matts Carlsson, an auto industry analyst with the Gothenburg Management Institute, told the FT.

Reached on Monday by the TT news agency, Jöran Hägglund, a state secretary in Sweden’s enterprise ministry, said he was unaware of plans for Volvo and Saab to be sold, but confirmed that the government is holding ongoing discussions with both Ford and GM.

According to Hägglund, no decision will be taken regarding possible state aid for Saab and Volvo before the details of the European Commission’s €200 billion ($253 billion) stimulus package have been finalized.

Part of the package, roughly €5 billion, is expected to go support the European auto industry.

Moreover, Hägglund believes that the futures of Ford and GM depend largely on a decision expected later this week by the US Congress regarding a request for $25 billion to help bailout the US auto industry.

“We have no reason to race ahead of the pack,” said Hägglund.

According to the FT, both Ford and GM are expected inform the US Congress of plans to offload the overseas brands to assuage concerns that any US aid might be used to support the companies’ overseas operations.

VOLVO

Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.

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