Sweden's two struggling car makers Thursday announced new measures to cut costs in an attempt to reverse spiraling losses, with Saab Automobile AB saying it will lay off nearly one-fifth of its work force and Volvo Cars freezing salaries and scaling back production.

Separately, the European Investment Bank, the European Union's long-term lending arm, approved 3 billion euros ($3.85 billion) in new loans for the bloc's troubled auto industry. The EIB also said it planned to submit a further 2.8 billion euros in loans to its board of directors in April and May.

The EIB said it lent 400 million euros each to Swedish truck makers Volvo AB and Scania AB and 200 million euros to Volvo Cars, owned by Ford Motor Co. France's PSA Peugeot-Citroen SA and Renault SA, Italy's Fiat SpA and German auto makers BMW AG and Daimler AG will each receive 400 million euros. Most of the loans will go to projects that aim to increase fuel efficiency and cut carbon-dioxideemissions.

France, meanwhile, agreed to give 250 million euros in emergency funds to Renault Trucks, a subsidiary of Volvo AB, on the condition it won't cut French jobs or plants.

Saab, which owner General Motors Corp. wants to offload by 2010, said it is giving notice to 750 staff at its Trollhattan plant in western Sweden. The car maker, which currently employs 4,100 people, filed for bankruptcy/" target="_blank">bankruptcy protection last month. In its struggle to survive, Saab is trying to gain the interest of investors so that it can continue operations after GM severs its ties.

The job cuts may also be necessary to get its own EIB loan, which the company applied for last month.

In a move to avoid more layoffs, rival Volvo Cars, which owner Ford is trying to sell, said it has signed a deal with unions to lower personnel costs. The measures, which include freezing salaries for all employees until January 2010, should save close to 500 million Swedish kronor ($57 million), the car maker said.

Ola Kinnander / Ian Edmondson