French carmakers receive EUR 6 bn aid: reports

9th February 2009, Comments 0 comments

Renault and PSA Citroen will receive EUR 3 billion from the state, report two French dailies.

PARIS – The French state will lend EUR 3 billion each to carmakers Renault and PSA Citroen as part of aid to the auto industry to be unveiled on Monday, the dailies Les Echos and Le Figaro reported.

In order to receive the EUR 3 billion loans at preferential rates the two carmakers are to pledge to not lay off any workers or close any factories in France, the dailies wrote.

The companies are also to pledge to issue moderate dividends and bonuses to executives will be reduced, they added.

In January, Prime Minister Francois Fillon promised French carmakers aid in the area of EUR 5 to 6 billion.

The amount could rise further if the French state decides to help Renault Trucks, which is owned by AB Volvo.

The French state provided EUR 1 billion of preferential rate loans to the financing arms of the carmakers in December. It also brought in a bonus to buyers to encourage the purchase of new cars.

The aid package has sparked fears of protectionism after French officials, including President Nicolas Sarkozy, appeared to tie it to bringing production back to France from other countries, including other EU countries.

The Financial Times also reported that Paris would ask car companies that receive state aid to buy only French-made parts, which also fuelled protectionism concerns in the European Commission.

A slump in sales in the second half of last year forced both Renault and PSA Citroen to temporarily halt production at numerous sites at the end of last year.

Car sales were down 7.9 percent in January compared to the same month in 2008, following drops of around 15 percent in November and December.

[AFP / Expatica]

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