France Pledges €8 Billion Rescue Plan for Deteriorating Car Industry

Published May 27th, 2020 - 10:30 GMT
France Pledges €8 Billion Rescue Plan for Deteriorating Car Industry
The 8 billion euros does not include a 5 billion-euro government loan guarantee under discussion for struggling Renault. (Shutterstock)
French President Emmanuel Macron unveiled on Tuesday an 8 billion-euro ($8.8 billion) plan to save the country’s car industry from huge losses wrought by virus lockdowns, including a big boost for electric vehicles.
 

The plan includes government subsidies for car buyers and longer-term investment in innovative technology, especially in battery-powered cars, said an AP report.

“Our country wouldn’t be the same without its great brands – Renault, Peugeot, Citroen,” Macron declared, and announcing a goal of making France the leading producer of “clean” cars in Europe.

The 8 billion euros does not include a 5 billion-euro government loan guarantee under discussion for struggling Renault, or the millions the government has already spent on temporary unemployment payments to auto workers told to stay home for weeks to keep the virus at bay.

As carmakers around the world face record slumps in sales, Macron met with industry representatives and unions at the Elysee presidential palace on Tuesday morning, notably to discuss the loan guarantee for Renault. He then visited supplier Valeo, which makes equipment for electric cars, at its factory in northern France, from where he detailed the wider rescue plan.

The issue is politically sensitive, since France is proud of its auto industry, which employs 400,000 people in the country and is a big part of its manufacturing sector. The government wants carmakers to develop innovative products in France and keep jobs in the country.

Finance Minister Bruno Le Maire has said that carmakers must commit to bringing back manufacturing to France in exchange for the support, but unions are wary as the industry is in turmoil.

 

The aid is expected to include government subsidies for consumers to buy a battery-powered car as well as other incentives for people to scrap their old car and buy a lower-emissions model.

 

Auto sales in France fell by about 90% in April compared with a year earlier as showrooms were shut and factories suspended production. The country started easing restrictions on May 11 after two months of strict lockdowns.

 

The plan to support the industry comes at a crucial time for carmaker Renault, which came into the virus crisis in particularly bad shape after the 2018 arrest of its longtime star CEO Carlos Ghosn.

 

Le Maire said Monday its survival is at stake and that the government — which owns 15% of Renault — would not require Renault to keep all its French jobs and facilities in exchange for the rescue funds, in order to allow the company to adapt to the economic situation.

 

Renault and Nissan have scheduled an announcement Wednesday that is expected to address the future of their alliance. Renault unions say they have been summoned to a meeting Thursday on how the carmaker will cut 2 billion euros ($2.2 billion) in costs, and expect that will lead to factory closures and job losses in France.

 

AHN


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