French President, Emmanuel Macron, revealed an Є8bn ($8.78bn) action plan on Tuesday, to save the country’s automotive industry, which has taken from COVID-19 related shutdowns and economic decline.
The new plan includes government appropriations for car buyers and long-term investment in advanced technology, particularly in electric or hybrid cars with an aim of producing at least a million vehicles per year by 2025.
COVID-19 related shutdowns hit French carmakers hard, with car sales declining by around 90 pc in April 2020 from the previous year. Restrictions began lessening on May 11, after two months of closures.
The French auto industry, a large part of its manufacturing sector, employs 400,000 people. The number increases to 900,000 when related services are included. The government’s support for the national car industry, including companies such as Peugeot and Renault as well as parts suppliers, will increase enormously as part of the new approach Macron said.
EV dreams spur French carmakers
Carmaker Renault was already in bad shape before the pandemic and has struggled since 2018. The group reported a loss in 2019, its first in years, and per reports, unions believe it could announce extensive job cuts and factory closures in France. The French government is its single biggest shareholder with a 15pc stake and has been negotiating a Є5bn loan guarantee to assist the company. Renault plans to triple clean car production by 2022, according to media reports.
PSA Group, which makes Peugeot and Citroen cars, entered the crisis in a better position following years of cost reductions related to electric and driver-less vehicle conversions. PSA reported record profits in 2019, but sales over the past couple of months declined due to COVID-19. It is in the process of merging with Fiat Chrysler to become the fourth-largest global auto maker and plans to increase clean auto production to 450,000 per year, according to reports.
Carmakers in other countries have also been hit by the pandemic. US automakers have not received direct government relief, but auto suppliers and dealers may apply for low-interest loans under the government’s CARES plan. Some US politicians opted to not bail out carmakers after the vast bailouts following the 2008 financial crisis. French carmakers also received billions in bailout funds following the financial crisis of 2008 and benefited from a government plan that stimulated consumer buying of new cars.
Fiat Chrysler, headquartered in the Netherlands with its financial base in Britain, confirmed a request earlier in May for an Italian state funded loan of Є6.3bn, which triggered a debate in Italy over whether funding should be provided to companies with overseas headquarters.
($1 = Є.91)