Sunday

20th Aug 2017

France to rescue domestic car industry

  • France wants car sector jobs to stay in the country (Photo: European Commission)

France on Monday (9 February) announced €6.5 billion in loans to three national automobile manufacturers in a bid to save jobs.

President Nicolas Sarkozy announced that Peugeot-Citroen will receive €3 billion in preferential loans, as will Renault.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Renault Trucks, which, while based in France, is actually own by AB Volvo of Sweden, will receive €500 million in loans.

The negotiated quid pro quo is a pledge to keep the car factories open, maintain jobs and produce ‘green' cars.

The bail-out agreement will also restrict executive bonuses and cap dividends, according to industry secretary Luc Chatel.

"This is not a gift. It is not a subsidy. It is a loan offered at an interest rate of six percent," Mr Sarkozy said of the disbursements, which will be doled out over five years.

"Renault and PSA have made a commitment ... to close no sites over the duration of the loan and to do everything to avoid redundancies," he added.

Some ten percent of the French work in the car sector, making it one of the biggest employers.

Britain, Germany, Italy and the US too have all committed public funds to aid their own car sectors.

Last month, the UK supplied car companies and parts manufacturers £1.3 billion (€1.5bn) in loan guarantees from the European Investment Bank, along with a direct £1 billion (€1.1bn) from public funds. Also in January, Berlin committed €1.5 billion to its car producers, in a plan to encourage new car purchases.

Italy's $1.7 billion (€1.3bn) plan for its car firms is similar to that of Germany, offering consumers €1,500 if they trade in their old car for a greener replacement.

The more expensive French move however is already raising warnings of a trend towards economic nationalism.

"The fragile economic prospects of every WTO member have become especially vulnerable to the introduction of any new measure that closes off market access or distorts competition," said the director general of the World Trade Organisation, Pascal Lamy, in response to the French bail-outs at a meeting of ambassadors to the WTO in Geneva.

"We must remain vigilant," he added.

The European Commission too has reacted with caution.

"The commission will need to scrutinise very carefully details of the subsidies, the conditions attached, to make sure of their compliance with state aid and single market rules," commission competition spokesman Jonathan Todd said on Monday.

Airbnb too 'different' to pay EU tax

US home rental firm said its “model is unique” because most of the money stays in pockets of local people, as France and Germany prepare EU tax crackdown.

Greece looking at bond market return

Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

Greece to get €7.7bn loan next week

The ESM, the eurozone emergency fund, agreed on Friday to unblock a new tranche of aid as part of the bailout programme agreed upon in 2015.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. Macedonia sacks top prosecutor over wiretap scandal
  2. ECB concerned stronger euro could derail economic recovery
  3. Mixed Irish reactions to post-Brexit border proposal
  4. European Union returns to 2 percent growth
  5. Russian power most feared in Europe
  6. Ireland continues to refuse €13 billion in back taxes from Apple
  7. UK unemployment lowest since 1975
  8. Europe facing 'explosive cocktail' in its backyard, report warns

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference