France to pump €8 billion into car industry

On Tuesday, France's President, Emmanuel Macron, unveiled a plan worth €8 billion ($8.8 billion) for the country's automotive industry. A part of the stimulus will be directed to boost local manufacturing of electric and hybrid cars, and incentivize buyers towards lower-emissions models through increased government subsidies.

"We need to not only save the industry but transform it," said Macron at a press conference at a factory of Valeo SA, a French automotive parts maker.

France is among the world's premier car manufacturing countries — home to Renault, Citroen and Peugeot, and to the world motoring federation, the FIA. 

Read more:  EU car sales sink to record-low levels

Boost car buying and local manufacturing

Macron said that France would increase the government's contribution towards people buying new electric cars to €7,000 from the current €6,000. Companies buying electric fleet cars would be eligible for €5,000. Electric cars remain considerably more costly than equivalent models powered by internal combustion, often weighing in at around twice the price. 

People buying new diesel or petrol cars may also qualify for up to €3,000 — if they can demonstrate their new vehicle is cleaner than their old one. Macron expects the stimulus to boost sales of unsold cars in French showrooms.

France's premier also insisted that the car models currently being manufactured in France shouldn't move abroad. Under the stimulus plan, France aims to produce over 1 million clean energy cars by 2025. 

Renault gets its loans, but must keep French factories open

The €8 billion plan includes a state loan worth €5 billion for troubled French carmaker, Renault SA. However, Macron said that the loan was contingent on Renault keeping two key plants in France open. The partially state-owned company was also expected to join a Franco-German project producing new electric batteries in order to receive state assistance.

Renault is expected to unveil a cost-cutting plan worth $2.2 billion (€2 billion) this week. Under the plan, the automaker may slash up to 5,000 jobs over four years and repurpose and close some plants, according to French daily newspaper Le Figaro.

On May 26, unions blockaded a Renault factory in western France, fearing factory closure and job losses owing to the coronavirus pandemic. About 400,000 people are directly employed in the automotive industry in France.

am/msh (AFP, dpa, Reuters)