The French government is prepared to spend up
to 6 billion euros (7.8 billion dollars) to help its struggling car industry in
light of a grim outlook for the sector in Europe this year, Prime Minister
Francois Fillon said Tuesday, dpa reported.
The government made the offer to French carmakers and their subcontractors.
However, the two large domestic manufacturers, Renault and PSA Peugeot Citroen,
had to pledge not to outsource their production and to make their purchases
from French suppliers.
The meeting in Paris was designed to devise state measures to aid the sector.
It included individuals from all branches of the car industry and French
government officials.
Fillon announced at the meeting that a 300-million-euro fund for the industry
had been established.
The government, Renault and CSA Peugeot Citroen are each to contribute 100
million euros to the fund, which is to help forge internationally competitive
suppliers and subcontractors in the sector.
Fillon also urged agreed measures by individual nations and the European
Commission to make credit available. He said that he expected the Commission to
take a position.
"We are not going to wait, as we did with the measures to help the banks,
and lose three months because there is a doctrine that forbids aid to the
ill," Fillon said.
At the meeting, European Commission Vice President Guenther Verheugen warned
that the global economic crisis could lead to the failure of one out of every
five small and mid-sized companies in the European automobile industry.
Therefore, Brussels must do everything in its power to protect the sector,
Verheugen said.
Renault head Carlos Ghosn agreed with the bleak forecast, saying that what he
called a "brutal and global crisis" could lead to 15 to 20 per cent
of jobs being lost in the European auto industry in 2009.
Ghosn said that car production in Europe, which fell by some 25 per cent in the
fourth quarter of 2008, would decline by about 15 per cent this year.
The crisis is threefold, he said. Firstly, credit is too expensive. Two-thirds
of all cars in Europe are bought on credit.
In addition, producers must invest in new products and new equipment. And,
finally, one out of every three suppliers in the sector is in a "very
difficult" situation.
"What is at stake is the survival of a large number of manufacturers,
suppliers and dealers," Ghosn said. Therefore, car makers, labour unions,
governments and the EU must all work closely together, he urged.
The French government is expected to announce additional aid measures for its
car industry by the end of the month.
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