The French government mulls providing financial support to the auto industry, according to Industry Minister Arnaud Montebourg, whose recent statement was in response to a call for funding from local carmaker Renault. Renault and fellow French carmaker PSA/Peugeot-Citroen are currently having overcapacity problems as demand for new vehicles in Europe dwindles.
Renault and PSA posted 21 percent and 14 percent drops in sales respectively for the January to April 2012 period, according to data from industry association ACEA. Carlos Tavares, Renault’s Chief Operating Officer, remarked that he would welcome "any kind of measure of support,” adding that the company is open and in favor of such a step.
The financial support for Renault could come in the form of incentives for new car buyers or tax breaks for more fuel-efficient vehicles. Investors welcomed Montebourg's comment, as PSA shares gained as much as 1.72 percent in Paris trading. PSA shares dived to 23-year low yesterday on worries about vehicle demand in Europe. Peugeot is the continent’s No. 2 carmaker in terms of sales.