France Auto Industry

By: EconomyWatch   Date: 30 June 2010

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A number of moves have been made by France auto industry in order to cope with its bad condition. It has come up with a scrapping incentive, which is meant for consumers who wish to sell off their older vehicles. It has provided guarantees, worth 1 billion Euros to financing divisions of Renault and PSA Peugeot Citroen for this purpose.

How will France auto industry fare in 2009?
Car making establishments, all over world are expecting that France auto industry would be able to play a major role in helping global auto industry tide over its present crisis. Since France is not facing housing problems like United States of America and consumers are in a better financial position compared to other countries, it would be possible for France auto industry to stage a reversal of fortune from hereon.

Financial aid for France auto industry
National government is mulling over possible introduction of new measures for helping its automobile industry in France. It is aiming to help out companies such as PSA Peugeot Citroen and Renault SA.

French Premier Francois Fillon said that they were thinking of increasing amount of aid, being handed over to car makers in France, as these companies have been finding it hard to get access to credit rates, which are reasonable, in traditional financial markets.

French government is considering a proposal to provide financial aid directly to car making companies. They are looking at bigger companies as they have been hardest hit by global financial slump. They would also consult with European Union regarding financial aid to be provided to auto industry in France.

France auto industry: Environment friendly measures
Throughout 2008 consumers in France were either given rewards or punished financially, on basis of fuel and environmental efficiency of their cars. Consumers were provided with discounts worth a thousand Euros if they purchased a new car, which was fuel efficient, and sold off their older cars.

President of France, Nicolas Sarkozy had introduced certain environment friendly measures to keep afloat France automobile industry and they are apparently proving to be successful, as has been proved by above mentioned figures. Rewards given to consumers for contributing towards fuel efficiency, form a part of a financial stimulus package worth 26 billion Euros, announced by Sarkozy in December 2008.

Effectiveness of Sarkozy's financial package
Patrick Pelata, Chief of Renault has said that as a result of Sarkozy's economic stimulus package, rate of decrease in sales of car could come down to 5 percent from projected rate of 15 percent. In December 2008, sales of Renault went down by 20 percent. But in 2009 there has been an increase of 40 percent in sales. Pelata opines that benefits of Sarkozy's package would be evident in their sales statistics up to March 2009.

Sarkozy's economic stimulus package has led to an increase in sales for C1 cars of Citroen by 39 percent in 2008 and as of 2009 there has been an increase of 4.3 percent. Orders for C1 cars of Citroen went up by 30 percent in December 2008 after it went down by 20 percent in November 2008.


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