SWEDEN’S PRIME minister has ruled out a government bailout for Saab Automobile, and warned that European leaders must not stand in the way of efforts to tackle overcapacity in the car industry.

Fredrik Reinfeldt said his government would offer credit guarantees if General Motors (GM) could find a buyer with the “powerful resources” needed to turn Saab round, as it emerged that the US carmaker had received fresh approaches for its Swedish unit.

But the government would not intervene if GM chose to liquidate Saab after a consortium led by Koenigsegg Automotive, the Swedish maker of high-performance sports cars, pulled out of a deal to buy the company this week.

“We have been very clear that we do not put taxpayer money intended for healthcare or education into owning car companies or covering losses in car companies,” Mr Reinfeldt said.

“You cannot save jobs just by pushing in taxpayers’ money if you don’t have the competitiveness to survive in a tough industry with overcapacity.”

Saab yesterday said GM had had expressions of interest from “more than one” potential bidder since Koenigsegg pulled out.

Merbanco, a Wyoming-based merchant bank linked with Saab in the past, is among those to have contacted GM, according to people close to the situation.

But Mr Reinfeldt said any bidder would need to prove its financial strength before receiving government backing.

“Anyone coming close to today’s Saab [would] need resources to cover losses and also to cover investment in development of the company,” he said.

Mr Reinfeldt’s centre-right administration has faced criticism from opposition parties over its hardline approach to Swedish carmakers ahead of next year’s general election.

– (Copyright The Financial Times Limited 2009)