European car makers want EU aid

Car makers want help to re-tool their factories

European car makers have asked for 40bn euros ($54bn; £30.9bn) in aid from the European Union to help develop green technologies.

They want low-interest loans from the EU so they can adapt their factories to make more fuel-efficient cars.

The European car makers' request is similar to a $25bn aid package that US car firms were awarded last week.

Congress voted to give cheap loans to Ford, General Motors and Chrysler to help them adapt to new emissions rules.

European car makers had already made it clear they saw the US package as a form of disguised subsidy.

Hesitant consumers

The proposed loans package will give an important and welcome signal to consumers and financial markets Christian Streiff ACEA president

Under the US plan, GM, Ford and Chrysler will each receive about $5bn, with suppliers sharing $10bn. No repayments will be required during the first five years.

Europe's car industry wants a similar aid package to ensure that it is not at any competitive disadvantage.

The request to the European Commission was agreed during a meeting held Friday at the Paris motor show, said the European Automobile Manufacturers' Association (ACEA).

The aim is to encourage the development of new environmentally-friendly vehicles and cut carbon dioxide emissions, blamed for a build-up of greenhouse gases that cause global warming.

"Carmakers face increasingly hesitant consumers and call on governments to respond and restore consumer confidence," said Christian Streiff, ACEA president, and chief executive of PSA Peugeot Citroen.

"The proposed loans package will give an important and welcome signal to consumers and financial markets," he said.

Industry gloom

PSA Peugeot Citroen said the loans would help the industry finance "very heavy investments" to modernise their factories and meet European Union targets for cleaner cars.

By 2012, car makers will have to cut the carbon dioxide emissions of new cars in Europe to an average of 130g per km travelled, from about 145-150g currently.

Those that miss the target would face fines for each car breaching the new limits.

The Paris motor show opened last week amid much industry gloom over the global financial crisis and the economic downturn in Europe.