The Flemish and federal Belgian governments have signed a letter of intent to provide up to €119 million in support measures to retain Volvo Cars' manufacturing operations in Ghent.
The agreement marks a significant intervention by Brussels to safeguard the automaker's presence in the region, which remains a cornerstone of its European production network.
6% year-on-year decline in global sales for the second quarter.
The financial commitment comes as Volvo Cars navigates a challenging global demand environment.
Earlier this week, the company reported a 5.6% year-on-year decline in global sales for the second quarter.
Despite the softening demand figures, Volvo shares (VOLVb.ST) rose in early trading, suggesting investors are weighing the strategic importance of the Ghent plant and the stability provided by government backing against near-term headwinds.
The Ghent facility is critical for Volvo's long-term strategy, particularly as the company accelerates its transition to electric vehicles.