Sweden Bails out Volvo, still no word for Saab. - Tilted Forum Project Discussion Community

Cynthetiq · 02-24-2009, 11:12 PM

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View: Sweden promises €445 million in loan guarantees to Volvo
Source: Motorauthority
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Sweden promises €445 million in loan guarantees to Volvo
The solipsism of American media has a way of quietly filtering out much of the rest of the world, but the car industry is in a pinch just about everywhere. Nowhere is that picture clearer than in Sweden where ailing carmakers Saab and Volvo have been seeking government aid for months.

Today word that the Swedish government is willing to back €445 million ($572 million) in loan guarantees for Volvo emerged, though rival and compatriot Saab is still without aid.

Why would the Swedes treat their two brands so differently? Parentage. Ford has pledged its willingness to take full responsibility and to guarantee capital flows to Volvo, Swedish state secretary Joran Hagglund told Autmotive News.

General Motors, on the other hand, made no such vow and has let Saab go its own way. The company has since filed for reorganization to help it separate from GM's corporate structure.

There's a catch on Volvo's government-secured loans, however: 10% of the funds must be secured by private creditors. Convincing market participants that the company is still viable enough to repay what it borrows is no small hurdle.

Still, given the relatively strong global position of Ford and the company's commitment to back its Swedish brand, the private financing is likely to come through, and therefore so are the government loan guarantees.

Volvo has made several strides toward improving its relevance lately, adding several models to its efficient DRIVe line of vehicles and offering dramatic, if controversial, new concepts such as the S60 (pictured).

It's a shame if Saab just dies. Volvo has been very good at keeping it's brand somehow fashionable and sustainable. I rented a Saab in Finland and got a nice speeding ticket for going 140kph. The officer wasn't all that happy with me for going so fast.

Volvo is a strong brand, the cars to me are bland and boring, but they do have somehow this awesome safety record that keeps buyers buying.

optik_nerve · 03-02-2009, 08:22 AM

I agree it'd be a shame if Saab just died. I owned an earlier 9-5 and loved it. That car had a personality of its own but the hard truth is that Saab's are very expensive to maintain. Yeah, they're reliable but things start to go wrong after 120k miles and it's not cheap to fix.

I hope somehow they can make it though this cause I'd love to buy another one in the near future.

snowy · 03-02-2009, 08:58 AM

Quote:

Originally Posted by Cynthetiq

Volvo is a strong brand, the cars to me are bland and boring, but they do have somehow this awesome safety record that keeps buyers buying.

Not just that, but reliability is a factor. Admittedly, Volvos have become less reliable since Ford came on board, but my '94 is still running like a dream without any issues. It looks like a Mom-mobile, but it's fun and fast.

I hope Volvo will be around for years to come.

LoganSnake · 03-02-2009, 09:14 AM

So, as a new owner of a Saab, should I be worried? I mean, the car is covered by a 3 year warranty. Am I going to lose that if Saab goes out of business?

QuasiMondo · 03-02-2009, 07:48 PM

Quote:

Originally Posted by LoganSnake

So, as a new owner of a Saab, should I be worried? I mean, the car is covered by a 3 year warranty. Am I going to lose that if Saab goes out of business?

Questions like yours makes me wonder why anybody would think that a Chapter 11 filing would be the way to go to save GM or Chrysler. SAAB slips under the radar because it's such a small company, yet people are going to shy away from them because they're worried about whether or not there will be a warranty or parts available should the company go belly up.

The failure of Saab (god forbid) only strengthens my belief that Ch 11 is not the way to save Detroit and that it will only serve as a speed bump on the road to Ch 7.

03-02-2009, 09:14 AM	#4 (permalink)
LoganSnake We work alone Location: Cake Town	So, as a new owner of a Saab, should I be worried? I mean, the car is covered by a 3 year warranty. Am I going to lose that if Saab goes out of business? __________________ Maturity is knowing you were an idiot in the past. Wisdom is knowing that you'll be an idiot in the future. Common sense is knowing that you should try not to be an idiot now. - J. Jacques

03-02-2009, 08:22 AM	#2 (permalink)
optik_nerve Psycho Location: Florida	I agree it'd be a shame if Saab just died. I owned an earlier 9-5 and loved it. That car had a personality of its own but the hard truth is that Saab's are very expensive to maintain. Yeah, they're reliable but things start to go wrong after 120k miles and it's not cheap to fix. I hope somehow they can make it though this cause I'd love to buy another one in the near future.