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VOLVO CARS

No European loan for Volvo Cars

A bid by Volvo Cars to secure a €200 million ($266 million) loan from the European Investment Bank (EIB) fell apart after talks with the Swedish government broke down, the company said on Thursday.

No European loan for Volvo Cars

The carmaker, based in Gothenburg, southwestern Sweden, cited a possible divestment by its US parent company Ford as the reason behind the breakdown in discussions.

The company said in a statement that the decision had been reached “jointly” with the government in light of “Ford’s strategic review which could lead to a sale of Volvo Cars.”

Ford said in March that it was in advanced discussions with potential buyers for its Swedish brand.

On March 12, the European Investment Bank granted €3.0 billion in loans to a number of European carmakers, €200 million of which was earmarked for Volvo Cars.

But the securing of those loans was dependent on the Swedish government agreeing to act as a guarantor.

“We are disappointed that we have not been able to come to an agreement. Our competitors in other markets like Italy, Germany, France and UK have been able to utilize similar EIB loans which clearly give them competitive advantage during these difficult times,” said Volvo’s chief executive Stephen Odell in a statement.

Volvo Cars has been a separate company from the Volvo Group, the truckmaker, since it was acquired by the US giant Ford in 1999 for $6.45 billion.

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CARS

Volvo stays in fast lane despite China dip

Swedish automaker Volvo Cars, owned by China's Geely, reported Wednesday a rise in first half profits even as sales tumbled in its biggest market, China.

Volvo stays in fast lane despite China dip
Volvo Cars' Swedish chief executive, Håkan Samuelsson. Photo: Bertil Ericson/TT

Note: An earlier version of this story said that first-half profits fell. While net profit attributable to shareholders indeed fell, overall net profits were up. The story has been amended to reflect this.

Net profit more than tripled to 877 million kronor (92 million euros, $56 million), while turnover climbed by 12 percent to 75.2 billion kronor.

Operating profit surged by more than 70 percent to 1.66 billion kronor, thanks to a strong US currency and robust sales of Volvo's SUV model XC60.

But net income attributable to owners of the parent company dropped by 60 percent to 173 million kronor (18 million euros, $20 million).

Volvo's overall car sales in terms of units rose by 1.4 percent to 232,284 during the first half.

The strongest sales growth was registered in Sweden and western Europe, while they remained stable in the United States and declined in China, by 1.2 percent, and the rest of the world, including Russia.

Volvo went through several dark years before returning to profit in 2013. In 2014, it beat its sales record from 2007, selling almost 466,000 vehicles. CEO Hakan Samuelsson told Swedish news agency TT the company expects to sell 500,000 cars this year.

The number of Volvo employees has risen by 10 percent in the past year, to 28,000 worldwide.

Despite its economic slowdown, Volvo plans to boost its presence in China and has acquired 50 percent of three joint ventures from parent company Geely: two assembly plants and one research and development centre.

Geely paid $1.8 billion to buy Volvo from US carmaker Ford in 2010.