Volvo Car Corporation will receive a €922 million ($1.2 billion) loan from China Development Bank to repay its debt, the Swedish carmaker announced on Thursday.
The Chinese-owned carmaker hopes for more loans to help finance the investment needed to double its sales. As a second step under the loan agreement, Volvo spokesman Per-Ake Froberg said that the carmaker hopes to secure credits to be used to help finance investments amounting to $11 billion, half of which will be spent on a production upgrade in Sweden. The first loan matures in 2020.
Volvo, which has reduced production at its main plants in response to weakening demand in Europe, announced plans to invest $11 billion in its drive to double total sales to 800,000 vehicles by 2020. “We are developing an entirely new vehicle architecture that will be very important and that will of course need to be financed,” Froberg was quoted as saying by Reuters.
Owned by Zhejiang Geely Holding Group, Volvo says the investment will cut costs and increase sales. Volvo CEO Hakan Samuelsson said last week there are no positive signals in Europe, while North America is „coming back” and that China continues to grow, albeit slower than before.