Ford Motor Co. and Renault have joined the German state of Lower Saxony, Volkswagen's second largest stakeholder, in raising alarm over a EUR7 billion ($9.1 billion) loan for PSA/Peugeot-Citroen guaranteed by the French government. The carmakers voiced concerns that the French government loan guarantee for PSA's troubled car-loans division will give PSA an unfair advantage in Europe's dwindling vehicle market.
Stephen Odell, chief executive of Ford of Europe CEO, disclosed that there were questions among some carmakers over the legality of PSA's refinancing deal. Odell remarked that it is not sustainable for government support to keep competitive companies going forward, particularly in a protracted downsized economy.
Ford is shutting down its vehicle plants in Genk, Belgium, and Southampton, England, vehicle plants, and its stamping factory in Dagenham near London, to help its European operations return to profitability by 2015. Ford expects to post over $1.5 billion in losses in Europe in 2012 and a similar amount in 2013. Meanwhile, Renault Chief Financial Officer Dominique Thorman said the carmaker will pay "close attention" to state support for PSA.
Renault wants to ensure that the rescue package does not give PSA unfair advantages. Thorman remarked that once Renault understands the details of the refinancing scheme for PSA, its interest is to ensure that there would not be any distortion of competition.
The French government holds a 15-percent share in Renault. On Tuesday, Lower Saxony expressed opposition to the French government refinancing for PSA. Lower Saxony indicated that the German government would ask for a European Commission review. European Union rules do not allow member countries to provide state aid to local companies, which give them an unfair advantage over rivals in other EU countries.