June 13 (Bloomberg) -- France is considering giving financial support to the car industry, Industry Minister Arnaud Montebourg said in response to a call for aid from Renault SA.
“We’re working in that direction,” Montebourg said when asked about possible assistance for automakers at a press conference today in Paris.
Renault and rival PSA Peugeot Citroen are struggling with excess capacity as demand for new vehicles shrinks across Europe. Renault’s sales have dropped about 21 percent from January to April, compared with a 14 percent decline at Peugeot, the European Automobile Manufacturers’ Association estimates. Renault Chief Operating Officer Carlos Tavares yesterday said he would welcome “any kind of measure of support.”
“We are completely open and in favour of such a step,” whether it takes the form of incentives for new car buyers or tax breaks for more fuel-efficient vehicles, he said at a press conference at Renault’s logistics center near Paris.
Peugeot shares gained as much as 1.72 percent in Paris trading, erasing earlier losses, after Montebourg’s comment. The stock hit a 23-year low yesterday amid concern about demand in Europe, where Peugeot ranks as the No. 2 carmaker, as well as overseas. Peugeot traded at 7.57 euros at 1:47 p.m. in Paris.
Renault also regained ground after the remarks. The stock fell 3.7 percent to 31.14 euros at 1:48 p.m. local time, compared with a drop of as much as 5.3 percent earlier today.
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