Sweden on Friday announced a Kroner 28 billion ($3.5 billion) government bail-out plan for its troubled carmakers, Volvo and Saab, to help them cope with falling demand.
The move, coming after the House of Representatives approved a $14 billion rescue for US automakers, effectively ends sell-off rumors about Volvo.
Volvo and Saab, both owned by US business groups, had been seeking government support because of the financial woes at home.
Volvo is owned by Ford Motor Co, while Saab is owned by General Motors, both of which are covered by the US rescue plan.
Under the bail-out plan, the government will give a maximum of Kroner 20 billion in credit guarantees, and up to Kroner 5 billion in loans. It would also offer another Kroner 3 billion for research and development efforts.
The bailout package will be effective from the day the Swedish parliament approves the bill, the government said.
Finance minister Anders Borg said the government would create conditions for the automakers to be able to operate on the market.
The car industry, with some 700 companies and suppliers, accounts for 15 per cent of Sweden's exports and offers employment to about 140,000 people.
Sweden, one of the top three best performing economies of the world, saw its industrial production fall 7.1 per cent in October - the first time since in November 1992. Industrial orders shrank 14.8 per cent, the worst since June 1993.
Meanwhile, Sweden's SKF, the world's biggest bearing maker, said it would cut 2,500 jobs - roughly 6 per cent of its workforce based on its 2007 staff levels. (See: SKF cutting 2,500 jobs worldwide)