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Auto maker Volvo has sealed a $US800 million ($874 million) loan from China Development Bank Corp. This is the second loan the company has received from the bank.
The Wall Street Journal reports that Volvo, the Swedish subsidiary of the Chinese-based Geely Group, previously received a $US922 million loan from the state-owned bank which it used to help pay back another loan with the European Investment Bank.
The company is currently attempting to bolster its range of cars and sports-utility vehicles. To do so, it has initiated an $11 billion, five-year investment plan.
Volvo intends to open factories in China, introduce new engines and redesign vehicle architectures as part of the plan.
“We are currently in a period of heavy investments and this loan gives us the flexibility we need,” Volvo spokesman Stefan Elfstöm said Monday.
AAP reports that China is expected to soon become Volvo’s largest national market ahead of the US.
China Development Bank is the first creditor of Volvo. On June 30 this year the company had an approximate total debt of 9.5 billion kronor ($A1.6 billion) with financial institutions.