Sweden's automakers have reacted positively to their government's plans to provide up to 28 billion kronor ($3.5 billion) in credit guarantees and emergency loans.

Volvo and Saab said they would decide in the next few days whether to apply for any of the funding that was announced today.

Both companies have been lined up for sale by their U.S. parents Ford Motor Co. and General Motors, which are facing a fight for survival in the firing line of a devastating market downturn.

Eric Geers, spokesman for Saab, told Automotive News Europe: "We are extremely positive. We have to work out the details, but this is a good step from the government with whom we have been having good discussions."

Geers said it was too early to say whether Saab would be applying for any of the funding, although it is thought the GM-owned brand will apply for some money.

Volvo was also happy about the announcement, which it said would also help suppliers.

"We will look into this announcement which we think is very positive," Volvo spokeswoman Maria Bohlin told ANE.

"It seems a good level of money. It will also help suppliers who have been having a difficult time," Bohlin said.

The Swedish parliament will vote on the proposals next week, but said the package meant there would be no state takeover of Saab or Volvo.

Both companies are loss making and could be sold by their owners, GM and Ford.

The Swedish government said: "The measures will be taken with the clear assumption that the state does not intend to acquire any of the existing automotive manufacturers."

The money will take the form of a 3 billion kronor ($375 million) investment in a state-owned research and development company.

The government will also provide 20 billion kronor ($2.5 billion) in credit guarantees to auto companies to borrow money from the European Investment Bank for use in developing green technology.

The final part of the plan is to provide rescue loans of up to 5 billion kronor ($625 million) for auto companies facing collapse.

The government said: "The measures are intended to create conditions for the continued success of the Swedish automotive industry in the future, to deal with the possibility of a deeper crisis in the automotive industry and to allow the quicker development of green technology."

Reuters contributed to this report