France plans to attach conditions to any injection of public funds into its troubled auto industry, with the repatriation of manufacturing to the top priority.
“We are telling car manufacturers that we are ready to help you, we are ready to improve the premiums for changing cars, to improve the competitiveness of your French sites,” Finance Minister Bruno Le Maire said on French television on Monday. BFM Business. “The quid pro quo is, what kind of in-shoring are you going to do? “
The minister has repeatedly raised the possibility in recent weeks that France is considering offering incentives to purchase battery vehicles as a way to stimulate the struggling industry. His comments on Monday were the first time he has spoken out.
The global auto industry has been hit by the coronavirus pandemic, which has resulted in closings of factories and showrooms. As Europe takes interim measures to reopen economies, reviving industry is a political and economic imperative for countries like France and Germany.
In France, where the CCFA automakers’ association estimates that more than 2 million jobs depend on the sector, new car registrations fell 89% in April.
Meetings this week
Industry leaders and representatives will meet with The Mayor this week to begin working on a global level to support automakers, including Renault SA and PSA Group SA. Discussions are expected to focus on the government’s fiscal stimulus plans for the fall.
However, the French state has limited means because the spending madness to counter the economic impact of the coronavirus should already swell the budget deficit to a post-war record. The government is also wary of pouring money into the auto industry if the benefits end up going mainly to foreign suppliers.
“Car manufacturers must also commit to saying what type of vehicle or type of manufacturing we will bring back to France and that is how we are going to build a stronger auto industry,” said Le Maire.
Renault obtained a loan guarantee of 5 billion euros (5.4 billion dollars) from the state, while PSA refused this type of public funds. By granting billions to the carrier Air France-KLM, the government has imposed conditions to make domestic service more environmentally friendly.
The leaders of the two French automakers have said they will support a plan to encourage sales of electric cars. Renault is pushing sales of its 100% electric Zoe car, while PSA has competing models including the new Citroën Ami.
Monday, PSA President Louis Gallois proposed to increase the French bonus for sales of electric cars to 6,000 euros per vehicle, while an incentive of 1,000 euros would be offered for hybrids.
“It’s a way to encourage sales,” he said on BFM Business radio.
Car maker Peugeot, Citroën and Opel said a more general cash payment program like the one proposed by governments after the 2008 financial crisis would distort the market.
“No drugs, a normal market and aid for the energy transition,” Jean-Philippe Imparato, director of the Peugeot brand, told BFM. ” We take care of the rest. “
Germany has postponed its decision on a new cash-for-clunkers program, forcing the country’s largest industry to wait for help.
Read more: Germany suspends Cash-for-Clunkers plan until early June
Before the pandemic set in, European automakers faced enormous pressure to sell electric cars this year or risked fines. While the industry had already started to slow, sales of battery-powered cars were increasing at a rapid pace, although they still represent only a fraction of the total.
© 2020 Bloomberg L.P.