France plans to tax PSA and Renault Competitors! image

France plans to introduce a tax on large luxury vehicles to help slow a drop in demand for smaller models built in the country, French newspaper La Tribune reports.

The proposal presents the idea as intended to protect the environment by favoring smaller, less-polluting cars, though it may be a form of protectionism helping Renault and PSA Peugeot Citroen.
In addition, France’s new Socialist government is considering reviving state aid for its struggling car industry following an appeal for help by Renault.

Arnaud Montebourg, industry minister, said: “We are studying this idea. This proposal, and the automobile sector, is undergoing a special examination here at the ministry.”

Renault and rival PSA Peugeot Citroen are struggling with excess capacity as demand for new vehicles shrinks across Europe. Renault’s sales have dropped about 21 percent from January to April, compared with a 14 percent decline at Peugeot, the European Automobile Manufacturers’ Association estimates.
Confidence in the French manufacturing industry fell to a reading of 92 in June from 93 in May, remaining well below the long-term average of 100.

Car sales in the European Union slumped for an eighth consecutive month in May, falling by 8.7 per cent year-on-year as the bloc’s financial crisis continued to undermine economic growth, data released on Friday showed.

The 1.1 million new cars registered in May took the total for the first five months of the year to 5.4 million — 7.7 per cent less than during the same time in 2011, according to the Brussels-based European Automobile Manufacturers’ Association (ACEA).