Page last updated at 17:34 GMT, Tuesday, 20 January 2009

France mulls more car sector help

Renault Megane
Car sales worldwide have slowed down

France is considering providing struggling car firms with aid worth up to 6bn euros (5.5bn; $7.7bn), the AFP news agency has reported.

The help, announced by Prime Minister Francois Fillon, would come on top of earlier measures worth 1.3bn euros.

The government wants to ensure that any French factories receiving aid remain open, and do not shift work elsewhere.

President Nicolas Sarkozy is tipped to set out plans to help the industry cope with falling demand in the coming days.

"Our effort in favour of manufacturers will be massive," the prime minister said, according to the AFP news agency.

"What are we talking about? Sums of the order of five or six billion euros."

'Urgent need'

Industry leaders met government officials on Tuesday to discuss the future of the sector, which employs around 10% of the country's workforce.

Carlos Ghosn, Renault boss and president of the European Carmakers Association, said carmakers were facing the worst crisis since the Great Depression.

Mr Ghosn said French car firms, who had an "urgent need" for liquidity, should pay lower taxes to help them remain in France.

Separately, Volkswagen said 60,000 of its staff would have to work shorter hours one week next month.

The German carmaker said production had to be reduced in response to falling demand for its vehicles.

Mr Ghosn also said the car industry should be given the same type of help that has been given to US car firms, to help them survive.

In December the US government said it would provide $17.4bn in loans to help ailing car firms General Motors and Chrysler.

Further help was given to car finance firms in an attempt to stimulate car sales.

That money is coming out of the $700bn package initially promised to rescue US banks.

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