Government aid is likely to cost French automakers state stakes in their companies, a minister has said.
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Industry minister Luc Chatel made the comment ahead of a Tuesday meeting at which aid measures are expected to be announced, Reuters reported.
A new EUR300m (US$400m) state support fund for the industry would be launched ahead of a broader rescue package to be unveiled in late January, Chatel said, according to Agence France-Presse.
That followed president Nicolas Sarkozy saying last Thursday that France would put “a lot of money” into aid for the car industry which is one of the country’s largest employers, Reuters noted.
Economy minister Christine Lagarde said last week the government was likely to announce measures to boost carmakers’ capital and improve financing for car purchases, the news agency noted, but Chatel said in an interview published Monday nothing had been decided.
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By GlobalData“Carmakers’ needs are not necessarily in the form of boosting their capital but, in exchange for our financial support, taking a stake in [companies’] capital can, in some cases, be a fair trade,” he told Le Figaro.
An unsourced report in Le Parisien said the the government plan would be worth between EUR5bn and EUR10bn to boost capital at carmakers’ finance units while other measures such as deferring suppliers’ tax payments were under scrutiny.
The government was also considering acquiring stakes in carmakers, that newspaper reported according to Reuters, even though the finance ministry believed there was a risk such a move would concern the firms’ existing shareholders.
The state could more easily acquire stakes in suppliers or subcontractors, the newspaper said.
Chatel reportedly said several options were being considered.
“Loans at favourable rates, loan guarantees, convertible bonds – we are studying all the possibilities,” he said.
“The major issue is what is given in exchange. This support plan will not be a gift. Carmakers will notably have to commit to keeping industrial sites in France,” he said, adding that the plan would also cover foreign carmakers with sites in France.
That includes Toyota’s Yaris plant and Daimler’s Smart factory.
