While Volvo Cars, the Swedish subsidiary of US carmaker Ford, has urged the Swedish government to introduce more incentives to help the flagging industry, US car making giant General Motors (GM) has to present more detailed business plans before the government is prepared to offer credit guarantees for GM’s troubled Swedish subsidiary Saab, media reports said. “We have regular meetings and discussions with GM and Saab. We have asked for clarifications and better facts,” State Secretary Joran Hagglund at the Ministry of Enterprise said. The Swedish government wants “more credible business plans that describe developments a few years ahead based on scenarios where sales continue to drop and measures to counter that,” Hagglund added. He said the size of the possible loan guarantees also hinged on talks GM and Saab were engaged in with the European Investment Bank.

General Motors took full control of Saab - one of Europe’s smallest carmakers - in 2000. In December 2008, the Swedish government launched a 28 billion Swedish crowns (2.57 billion Euro) package aimed at securing the long-term viability of Swedish-based vehicle makers. It included funds for a research and development centre as well as credit guarantees and rescue loans. However, the government is anxious to ensure that state funds do not end up abroad.

Volvo’s suggestions included reintroducing a premium for the demolition of old cars, extending a tax-break scheme for ecologically friendly cars and conducting a review of diesel fuel taxes. “A demolition premium has a double benefit. Old cars that cause more harm to the environment than new cars disappear while the car industry gets a boost and more people keep their jobs,” Volvo Cars Chief Executive Stephen Odell told financial daily Dagens Industri.

The government last year said it planned to end the 10,000-kronor (1,134 Euro) rebate for ecologically friendly cars in June 2009. The scheme was launched in April 2007. The call for state help coincided with the 10-year anniversary of the sale of Volvo Cars to Ford. The US giant recently signaled it wants to sell Volvo Cars. Car sales in Sweden dropped some 45 per cent in December, “the largest (drop) in Europe,” Odell said. Volvo Cars is reviewing its costs and may shed more employees if sales don’t pick up, Odell said. He added that Volvo and Saab have a sizeable portion of the Swedish car market, so the sales drop has an outsize impact on the groups, and the cars are a national business symbol for the country around the world, and have an iconic image and almost cult-like following for some of their models.

Volvo Cars was preparing its requests for state guarantees in order to secure loans from the European Investment Bank, the report said. Saab and Volvo are both struggling, although Saab is in more difficulty as it has what analysts said is an aging product range and soaring costs and, like GM, appears to have been cut not anticipating what drivers wanted. GM is the hardest-hit of the US’s Big Three, which also includes Chrysler, affiliated with Daimler in Germany. Haegglund met with the heads of Ford and GM in Detroit and said later both agreed to cooperate with Sweden’s requests.