France tries kiss of life on Volvo

THE FRENCH government appeared yesterday to be trying to rescue the merger between Renault and Volvo after the Swedish car group pulled out of the deal in the face of management and shareholder opposition, writes Michael Harrison.

Edouard Balladur, the French Prime Minister, said the government 'continues to believe the merger is a good solution'. His office added that it was necessary for 'positions to be clarified within Volvo so that we can find out exactly what out partners want'.

Louis Schweitzer, the Renault chairman, said in Paris that changes would be needed if there were to be another opportunity to merge with Volvo.

The softening in the French stance cut little ice in Stockholm, however, where Bo Rydin, who has replaced Pehr Gyllenhammar as Volvo chairman, cast doubt on whether even the existing industrial alliance and cross-shareholder agreements between the two car makers would continue.

'The French are certainly very upset by this. We have to start again from zero, we must find a strategy Volvo's shareholders can live with,' he said.