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French Finance Minister Bruno Le Maire said he will meet the heads of French carmakers Renault and PSA on Wednesday to discuss how to help the sector, as production ground to a standstill in Europe due to the coronavirus. -- Reuters photo
French Finance Minister Bruno Le Maire said he will meet the heads of French carmakers Renault and PSA on Wednesday to discuss how to help the sector, as production ground to a standstill in Europe due to the coronavirus. -- Reuters photo

PARIS: French Finance Minister Bruno Le Maire said he will meet the heads of French carmakers Renault and PSA on Wednesday to discuss how to help the sector, as production ground to a standstill in Europe due to the coronavirus.

Auto companies worldwide have been hit hard by the health crisis, first as production stalled in China, where the virus originated from, and now it spreads in Europe, where some governments are ordering unprecedented lockdowns to contain it.

Peugeot owner PSA, which also produces the Opel and Vauxhall brands, said on Monday it would close it European factories until March 27, while Renault has suspended industrial activity in France and Spain until further notice.

“Today I will talk to the heads of Renault and PSA as the car sector has come to a halt,” Le Maire told BFM Business radio.

Le Maire said that the meeting was aimed at “making sure second-rank subcontractors are treated fairly.”

Tyre maker Michelin has closed its factories in Spain, Italy and France for at least a week, and the car firms work with many smaller suppliers too.

Le Maire also evoked potentially major steps including state bailouts, saying the government had a range of tools at its disposal, including nationalisation, to insure the survival of large companies. He did not say which firms he had in mind.

“The situation is extremely clear ... it is out of the question to see big French companies, industrial icons disappear,’ he said. “If to protect our national industrial heritage, we have to resort to nationalisation, we are prepared to go that far,” he added.

The coronavirus crisis has caught carmakers at a fragile time, as many were already grappling with a slump in demand in big markets like China and have invested massively in innovations like less polluting cars.

Renault, in which the French government has a 15% stake, had in February flagged an extra 2 billion euros in cost cuts over the next three years after posting its first loss in a decade.

The company had at that stage stressed that it had no issues with cash availability. Its debt rating was also downgraded to “junk” status by Moody’s.

PSA, which is in the middle of merging with Italy’s Fiat Chrysler, fared better in its recent results, with profitability reaching a record high in 2019 as it focused on pricier models.

France’s automotive industry federation on Tuesday said it has asked the government for a much broader support package than measures already announced to counter the effects of the coronavirus outbreak on car sales.

This could include state incentives to purchase electric cars and massive investment in recharging infrastructure, it said. -- Reuters

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