Renault is to repay EUR500m (US$611m) to the French government by the end of this year following an easing of market conditions.

Both Renault and Peugeot received EUR3bn each in aid from the French state to see them through the credit crisis, but Renault said it was now in a position to pay back a substantial chunk of the loan to the government.

“Carlos Ghosn [Renault CEO] said Renault and PSA have agreed they want to begin reimbursing the loan but it would be good if the first installment was done at the same time,” a Renault spokeswoman in Paris told just-auto.

“What has changed is the financial markets. When the loan was given, it was practically impossible to raise money – we did have a liquidity problem but rates have fallen now. We have sufficient liquidity and it is a matter of the environment changing.”

Renault’s improved cash situation has also been aided by a rigorous cost analysis that has yielded significant savings and allowed it to tackle the loan repayment with more confidence.

“There was a very energetic plan undertaken within Renault to improve cash flow and reduce costs – that has borne fruit,” added the spokeswoman. We have positive cash flow, so it is a combination of what was inside the company and the financial environment.”

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By GlobalData

Conceding car companies “always need a lot cash,” the EUR3bn was used for operations such as new model development that required up front finance.

“Now the markets are functioning normally, we will pay it [loan] back before the end of the year,” the spokeswoman said.