France introduces €8bn rescue package to revitalise distressed automotive industry

The French government has set out an €8 billion (Dh32.1bbn) bailout for its ailing car industry, which has been hit hard by the coronavirus outbreak.

President Emmanuel Macron has also set out plans to make France the biggest producer of electric cars in Europe.

As part of the plan, €1bn has been put aside to give grants of up €7,000 to help people buy electric vehicles.

This amounts to €5,000 for each company purchase and €2,000 per hybrid rechargeable car. He set a target of France producing a million green cars annually by 2025.

“We need a motivational goal – make France Europe’s top producer of clean vehicles by bringing output to more than one million electric and hybrid cars per year over the next five years,” Mr Macron said while visiting a car factory in northern France.

He said he wanted to protect France’s “industrial car sovereignty” and that the plan was focused on “defending our industrial employment, which is going to be faced with one of the most serious crises in its history”.

“It is also a plan for the future of the automobile in the 21st century,” he added.

Starting on June 1, there will be a grant of €3,000 for converting from a petrol-fuelled car to a less-polluting one and as much as €5,000 to upgrade to an electric vehicle.

Mr Macron said that some three quarters of French people would be eligible for the incentives.

By the end of June, about half a million cars will have gone unsold with Mr Macron saying the industry is worth “close to 16 percent of the revenue of our industrial sector”.

Overall the car industry makes up 4,000 businesses in France and 900,000 employees overall.

The plan was welcomed by industry leaders with Luc Chatel, head of the automobile association, saying the target of one million electric or hybrid cars a year by 2025 was “realistic”.

“This sets out a new ambition for the auto industry in France and responds to the gravity of the situation”, he told France Info radio.

“Excluding periods of war, we are going through the most serious crisis in the history of the auto sector,” he added.

Mr Macron’s government is in talks with Renault, in which it has a 15 per cent stake, over a €5bn state loan.