French President Emmanuel Macron on Tuesday promised more than 8 billion euros (8.8 billion dollars) to boost the country’s automobile industry, hard-hit by the coronavirus pandemic.
In return, carmakers Renault and PSA – which makes Peugeot, Citroen, DS and Opel cars – had promised to maintain production on French soil and move higher-value activities back from overseas, Macron said.
The announcements came days before Renault is due to announce a 2-billion-euro cost-cutting plan.
The carmaker has not commented on media reports that it plans to shutter four factories in France.
The auto industry worldwide is reeling from the impact of coronavirus lockdowns and restrictions, with new car sales down more than 75 per cent year-on-year in the European Union in April.
In France, 250,000 employees in the sector are on state-funded temporary lay-off and the industry has 400,000 unsold vehicles on hand, Macron said.
To boost demand, private buyers of new electric cars will be eligible for state aid of 7,000 euros, Macron said.
Aid of 2,000 to 3,000 euros will be available for buyers of hybrid vehicles.
PSA had committed to building 130,000 electric and hybrid vehicles in France by 2021, compared to none last year, Macron announced after a visit to electric motor producer Valeo in northern France.
He added that Renault would quadruple its production of electrics and hybrids in France by 2024, with a goal of 240,000 vehicles.
“This is a plan to defend our industrial employment, which is going to be faced with one of the deepest crises in our history,” he said.