France plans to offer state aid to auto industry image

French new car sales fell by 16.1 percent in May to 165,776 vehicles, according to data released Friday by the the Committee of French Auto Manufacturers (CCFA).

Registrations of PSA Peugeot Citroen (UG.FR) dropped 28.5% in May, while those of its cross-town rival Renault SA (RNO.FR) were down 12%.

French car manufactures saw their sales drop by 21.9 percent on an unadjusted basis last month.
Many of Europe’s manufacturers are losing money because their sales have fallen because of the severe sovereign debt crisis ravaging the region. This drop in sales has led to the problem of overcapacity, creating pressure on some of these manufacturers to shut down plants.

Reuters reports that France’s Socialist government is studying the possibility of providing further state aid to its struggling automobile sector, Industry Minister Arnaud Montebourg said on Wednesday.
Montebourg said that he had met with Renault CEO Carlos Ghosn a few weeks ago, before taking office, and had discussed the possibility of further state support.

“This request was not made formally to the government, but it reached the government,” Montebourg told a news conference. “We are studying this request.”