French car makers Renault and PSA Peugeot-Citroen have come a step closer to securing a €6billion (£5.6bn) loan from the French government to help bolster the country’s struggling manufacturing industry.
French prime minister Francois Fillon announced that his government was considering the loan and would provide “a massive response on the automobile sector's financing”, but would only do so if manufacturers were to guarantee jobs. Car production currently accounts for around 10 per cent of France’s total employment.
Any deal hinges on PSA Peugeot-Citroen’s willingness to keep production sites in France running, a move Europe’s second-largest car maker is reluctant to commit to. “State assistance is out of the question for any car maker that decides to close a French site,” said Fillon.
Speaking to French newspaper Le Figaro, Peugeot CEO Christian Streiff said that his company would only accept state assistance “under conditions that don’t modify our ownership, our independence or our freedom of action”.
It is not yet known if the French government plans to take an equity stake in return for the funding, a move previously mooted by France’s industry minister Luc Chatel. The French government already owns a 15 per cent stake in Renault.
The French government has already announced motor industry bailout funds totalling €1.3 billion (£1.2bn) and has provided €300 million to fund a new-for-old vehicle-scrapping scheme. PSA and Renault’s financial lending arms both received €500 million last year as part of the government’s financial sector bailout.
President Nicolas Sarkozy is expected to announce a decision on the size of the bailout and its conditions in the next few days.