May 18, 2020 / 6:59 AM / 14 days ago

France to focus aid on greener car sector after virus hit

PARIS (Reuters) - France is seeking to bolster sales of cars with lower emissions as part of a support package to be announced over the next two weeks for an industry hard hit by coronavirus lockdowns, Finance Minister Bruno Le Maire said on Monday.

FILE PHOTO: The logo of Renault is seen at the Renault automobile factory in Flins as the French carmaker ramps up car production with new security and health measures during the outbreak of the coronavirus disease (COVID-19) in France, May 6, 2020. REUTERS/Gonzalo Fuentes/File Photo

Some carmakers, including France’s Renault (RENA.PA) and PSA (PEUP.PA), the group behind Peugeot, are starting to reopen plants after closures to control the spread of the novel coronavirus.

But demand was already weak even before the impact of the pandemic, which has exacerbated the financial difficulties of companies and their suppliers.

Le Maire, who met with auto industry bosses on Friday, told France Info radio the government aimed to use any support package or scrappage scheme to encourage a shift towards less polluting vehicles.

“I will announce a support plan ... in order to get consumption going again, in order to help this transformation towards a more sustainable model, with particular support for the cars that emit the least CO2,” Le Maire said.

Electric vehicles were too expensive for many households, Le Maire said, without giving further details of the types of measures envisaged and whether they would include direct state support for some firms.

Le Maire said the French government also hoped to announce a plan to help the country’s aeronautics sector by July 1.

France has rolled out bailout measures and state-guaranteed loans for other sectors hit by the pandemic, and has again sought to attach environmental conditions.

It requested for instance that airline Air France KLM (AIRF.PA) cut carbon emissions and domestic flights.

In the auto industry, Renault is in particular focus. After posting its first loss in a decade last year before the pandemic hit, it is first in line in the industry for a state-backed loan, which should amount to around to 5 billion euros ($5.40 billion), Le Maire has previously said.

Some suppliers have struggled to tap state aid schemes, which are funnelled though commercial banks. Novares, which makes plastic components for cars, went into temporary receivership at the end of April after failing to reach a rapid agreement with its lenders to solve a cash crunch.

Reporting by Sudip Kar-Gupta and Leigh Thomas; Writing by Sarah White; Editing by Catherine Evans and Barbara Lewis

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