The government wants carmakers to keep their French sites open
France has decided to loan 6.5bn euros ($8.5bn, £5.7bn) to three carmakers, President Nicolas Sarkozy has said.
Peugeot-Citroen and Renault will receive 3bn euros each, while Renault Trucks, which is owned by Sweden's AB Volvo, will get 500m euros.
In exchange, they had pledged to keep French sites open, the president said after talks with carmakers.
The car industry is one of France's biggest employers. Demand for cars has plummeted amid the global downturn.
Industry secretary Luc Chatel said the terms of the car bail-out foresaw a reining in management bonuses.
"This is not a gift. It is not a subsidy. It is a loan offered at an interest rate of 6%," President Sarkozy said.
Meanwhile, The European Commission said it would look very carefully at the French car bail-out.
"The commission will need to scrutinise very carefully details of the subsidies, the conditions attached, to make sure of their compliance with state aid and single market rules," commission competition spokesman Jonathan Todd said.
The government loans, which will run over five years, will allow Renault and Peugeot-Citroen to "prepare calmly for the future", the president said.
"Renault and PSA have made a commitment... to close no sites over the duration of the loan and to do everything to avoid redundancies," he said.
"I welcome this commitment since it gives us the assurance that an acute but temporary crisis will not destroy part of our industrial base and our auto industry skills."
President Sarkozy also said the government would double its aid to car industry suppliers to 600m euros.
Renault and Peugeot-Citroen's financial services divisions will also get a doubled state aid of 2bn euros.
Both Peugeot and Renault will report their full-year results later this week.