Macron unveils €8 billion rescue package for French car industry

President Emmanuel Macron on Tuesday announced an €8 billion plan to revive France's auto industry by making it the European leader in electric cars, boosting a sector brought to its knees by the coronavirus.

Macron unveils €8 billion rescue package for French car industry
Emmanuel Macron at the car factory in Etaples. Photo: AFP

Macron said the package would include €1 billion in subsidies to encourage purchases of electric and hybrid cars and set a target of France producing a million green cars annually by 2025.

The “historic” intervention will aim to turn France's rechargeable car industry into Europe's biggest, the president said.

Visiting a car factory in Etaples in northern France, Macron said his government would seek to boost flagging customer demand with a subsidy of €7,000 for each individual buying an electric car, €5,000 for each company purchase, and €2,000 per hybrid rechargeable car.

Starting June 1st, there would also be an aid 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, the president said.

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

“In total, the state will provide a bit more than €8 billion in aid to the sector,” said Macron.

'Never before' 

France, the home of Renault, Citroen and Peugeot, has seen car sales and revenue slashed by some 80 percent as a result of a two-month nationwide lockdown to curb the spread of the coronavirus, said Macron.

By the end of June, some half a million cars will have gone unsold.

“This has never been seen by this sector which represents close to 16 percent of the revenue of our industrial sector,” said the president.

Macron with Valeo staff in Etaples. Photo: AFP

The car industry in France is critical to the French economy – comprising some 4,000 businesses, 400,000 direct employees and 900,000 in total.

The president said the plan was aimed at “defending our industrial employment, which is going to be faced with one of the most serious crises in its history” and also protecting France's “industrial automobile sovereignty”.

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

The plan won a warm welcome from the head of the sector association Plateforme Automobile, Luc Chatel.

“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.

Chatel applauded the plan for one million electric or hybrid cars annually by 2025 as “realistic”.

The French government is eager to use the crisis to push the industry in a greener direction and has made a €7 billion aid package for Air France conditional on a more environmentally-friendly strategy from the airline.

Renault revamp


Macron also announced that embattled Renault had agreed to join a Franco-German project to produce electric batteries for the rechargeable auto industry.

Finance Minister Bruno Le Maire has said Renault would need to join the project, which already includes competitor PSA, to receive a €5 billion government rescue loan.

Macron also linked the rescue deal for Renault to ensuring guarantees for the future of its staff at the plants in Maubeuge and Douai in northern France.

Macron had earlier held talks with Renault chairman Jean-Dominique Senart.

The automaker, in which the French state holds a 15 percent stake, is set to unveil this week a sweeping revamp of its operations as well as its partnership with Nissan and Mitsubishi.

Renault plans to cut 5,000 jobs in France by 2024, primarily by not replacing retirees, Le Figaro newspaper reported later Tuesday.

Renault declined to comment on that report when contacted by AFP.

Even before the current crisis, it had been rocked by the departure of CEO Carlos Ghosn, who was arrested in Japan in November 2018 over allegations of financial misconduct, including under-reporting salary and misuse of company assets at Renault partner Nissan.

Brazilian-born Ghosn, who also has French and Lebanese nationality, is now in Lebanon, where he fled in December after jumping bail in Japan.

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Macron vs the unions: What happens next in France?

French President Emmanuel Macron is facing his biggest standoff with France's trade unions since coming to power in 2017, with the outcome of a series of strikes and protests seen as decisive for both sides.

Macron vs the unions: What happens next in France?

The 45-year-old leader has made raising the retirement age a signature domestic policy of his second term in office — something the unions and millions of protesters are determined to block.

After two days of nationwide strikes and demonstrations, AFP looks at what is likely to happen next on the streets, in parliament, inside the government, and in wider French public opinion.

On the streets

Labour leaders were delighted with their second day of protests on Tuesday, which they claimed had seen around 2.5 million people hit the streets, including in many small and medium-sized towns.

Official estimates put the figure at 1.27 million, compared to 1.1 million people during round one on January 19th, according to the interior ministry.

READ MORE: Calendar: The latest French pension strike dates to remember

Momentum is clearly with the unions who announced two further days of protests and strikes next week, on Tuesday and Saturday.

“The movement is growing and spread across the whole country,” the head of the hard-left CGT union, Philippe Martinez, said on Wednesday.

Nevertheless, unions no longer have the ability to paralyse the country and working-from-home practices mean most white-collar workers can easily adjust to transport stoppages.

The biggest fear of authorities is a repeat of the 2018 so-called “Yellow Vest” protests — a spontaneous movement drawn mostly from the countryside and small-town France that led to shockingly violent clashes with police. 

“The trauma was so big and the violence so great, I don’t see it happening again for the moment,” Bruno Cautres from Sciences Po university in Paris told AFP earlier this month. 

In government 

The government was expecting a rough ride — few major policy changes happen in France without protests, and former president Nicolas Sarkozy faced similar resistance with his pension reform in 2010.

Macron has faced numerous challenges from the unions in the past and has always succeeded in pushing through his pro business agenda and social security reforms.

The only exception was his first attempt at pension reform — also highly contested — which he withdrew in 2020 during the Covid 19 pandemic.

Prime Minister Elisabeth Borne has been the public face of the latest proposals, while Macron has kept his statements and appearances to a minimum, as is his habit.

But with the battle lines hardening and protests growing, the president might be forced to enter the fray. 

“I think the president will speak, but not right now,” a minister told AFP on condition of anonymity. “If he did it now, it would look like we’re panicking.”

In parliament

The draft legislation will be debated for the first time in the 577-seat National Assembly from Monday.

Macron’s allies are the largest group with 170 seats, but they do not hold a majority after a weaker-than-expected showing in June elections.

Support from the 62 rightwing Republicans (LR) party MPs will be essential.

LR has long supported raising the retirement age, but there are doubts over how many of their MPs will give the government their backing.

“I’m not asking the government to give in to the protests. This reform needs to be done,” LR parliamentary party chief Olivier Marleix said on Wednesday.

The lower house debate will finish on February 17th at the latest when a vote can be called — or the government could transfer it to the Senate or ram it through with controversial executive powers that dispense with the need for a ballot.

The bill is expected to pass the conservative-dominated Senate, where a vote is to take place by mid-March.

Public opinion

The latest polling figures show a growing majority opposes the reform and supports the protests, with roughly two in three people against the proposals.

Ministers have struggled to find winning arguments, at times arguing the changes are needed to reduce government spending, at others insisting they will make the pension system fairer.

“The government has not won with the argument that it is necessary,” Bernard Sananes, the head of the Elabe polling group, told AFP. “And it is fighting on another, more intense front which is that the reform is seen as unfair.”

In private, Macron’s allies insist their best hope is for parliament to quickly approve the legislation that will never be popular but might grudgingly be accepted as necessary.

“The question is how big the protest movement will be and how long it will last,” the minister told AFP.