France lures Renault, Peugeot with cash to keep plants open
France extended more credit to PSA Peugeot Citroen and Renault SA and said aid to the carmakers may reach 6 bn euros ($7.8 bn) in return for their pledges to keep domestic plants open.
By Bloomberg |
PARIS: France extended more credit to PSA Peugeot Citroen and Renault SA and said aid to the carmakers may reach 6 bn euros ($7.8 bn) in return for their pledges to keep domestic plants open.
���Our efforts for carmakers will be massive,��� Prime Minister Francois Fillon told an industry conference on Tuesday in Paris. In return for aid totaling 5 billion euros to 6 billion euros, the government wants the carmakers to give ���exemplary commitments��� to keep production in France and help their struggling suppliers, he said.
France has taken the lead in support for auto companies, after 2008 European car sales suffered the biggest contraction in 15 years. The government has already granted more than 1.32 billion euros ($1.71 billion) in assistance and is planning further aid measures, to be announced within two weeks.
���State assistance is out of the question for any carmaker that decides to close a French site,��� Fillon said. As a first step, he said, the government will increase access to low- interest loans for the carmakers��� sales-financing divisions, which have already received 500 million euros in credits each.
Renault fell as much as 79 cents, or 4.8%, to 15.62 euros in Paris trading and was 4.5% lower as of 1:01 p.m., while Peugeot declined as much as 39 cents, or 3%, to 12.80 euros and was down 2.2%.
While Renault is ���determined��� to keep production in France, Chief Executive Officer Carlos Ghosn said, the company is relying on the government to ���put in place the competitive conditions to make that possible.��� The French state owns 15% of Renault, based in the Paris suburb of Boulogne-Billancourt.
The production cost for a small Renault car is 1,400 euros higher in France than in Turkey, representing about 10% of its sticker price in the home market. Labor taxes and social-security charges account for more than two-thirds of that difference.
���Our efforts for carmakers will be massive,��� Prime Minister Francois Fillon told an industry conference on Tuesday in Paris. In return for aid totaling 5 billion euros to 6 billion euros, the government wants the carmakers to give ���exemplary commitments��� to keep production in France and help their struggling suppliers, he said.
France has taken the lead in support for auto companies, after 2008 European car sales suffered the biggest contraction in 15 years. The government has already granted more than 1.32 billion euros ($1.71 billion) in assistance and is planning further aid measures, to be announced within two weeks.
���State assistance is out of the question for any carmaker that decides to close a French site,��� Fillon said. As a first step, he said, the government will increase access to low- interest loans for the carmakers��� sales-financing divisions, which have already received 500 million euros in credits each.
Renault fell as much as 79 cents, or 4.8%, to 15.62 euros in Paris trading and was 4.5% lower as of 1:01 p.m., while Peugeot declined as much as 39 cents, or 3%, to 12.80 euros and was down 2.2%.
While Renault is ���determined��� to keep production in France, Chief Executive Officer Carlos Ghosn said, the company is relying on the government to ���put in place the competitive conditions to make that possible.��� The French state owns 15% of Renault, based in the Paris suburb of Boulogne-Billancourt.
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The production cost for a small Renault car is 1,400 euros higher in France than in Turkey, representing about 10% of its sticker price in the home market. Labor taxes and social-security charges account for more than two-thirds of that difference.
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