French Government Presents a Modest Aid Plan for the Auto Industry image

On Wednesday, July 25th, the French government presented an aid plan to help the affected auto industry, mainly based on raising subsidies on EVs.

Facing Peugeot’s decision to close a plant near Paris and lay off 8,000 employees, the government came up with a modest aid plan, mainly based on raising subsidies on electric vehicles. This plan is less ambitious than the one offered in 2008-2009 by the previous government, which included a popular cash-for-clunkers scheme.

The ministry said that the new plan will boost incentives for customers who want to buy EVs from 5,000 euro to 7,000 euro ($8,500). Subsidies for hybrid cars manufactured by Peugeot and Toyota will double to 4,000 euro. The government also plans to allow 150 million euro in state-backed loans to help auto industry sub-contractors, who were also hit by the slowdown.

It remains to be seen if the French government manages to get the country back on track after the European car sales fell almost 7% in the first half of 2012, Peugeot plans to lay off 8,000 employees and shut down a plant near Paris, the first French facility to be closed in the past 20 years.