PSA Peugeot Citroën and the French goverment have been negotiating how to repair the company's business position without ruining the new government's promises to the electorate. At last count, Peugeot wants to send 14,000 workers home for good, close a factory in Aulnay, and trim some of its 25% overcapacity. The automaker desperately wants to sell more cars to help it stop losing €200 million ($246M U.S.) per month. The government has already nixed the most drastic plans, but it needs to keep Peugeot from drowning at the same time as doing so saves jobs, encourages domestic car sales, and balances a nasty state budget. In addition, any maneuver needs to keep the EU's competition watchdog from intervening.

Dow Jones reports that the solution involves increasing cash incentives for EV and hybrid purchases and raising taxes on "high emission vehicles." France already provides a €5,000 subsidy for EVs and €2,000 for hybrids, but those will see a €2,000 bump to €7,000 and €4,000, respectively. The CO2 output or engine displacement that would qualify a vehicle as "high emission" isn't stated. Supplemental and longer-term plans include asking the EU to examine a free-trade agreement with South Korea that France says has resulted in a glut of South Korean cars, and providing €600 million in lifelines to smaller, struggling automaker suppliers.

From our perspective, the measures look like more of the same largely-useless pussyfooting that has kept Europe staring at the economic apocalypse for more than two years. In a New York Times article about Europe's "day of reckoning," Fiat and Chrysler CEO Sergio Marchionne said, "I've never seen it this bad. All the unresolved issues that have been plaguing the industry for a number of years have all come forward."

Austerity measures on top of the general European economy are keeping buyers away, and we have no idea how another €2,000 on the hood is supposed to spur enough demand for EVs and hybrids to help Peugeot and Citroën. Even if they tripled their sales numbers, they'd still be niche vehicles.

The problem right now is that in 30 days Peugeot will be another €200 million in the hole, and neither the company nor the government can allow that to continue, else they'll both be taking even bigger lumps soon enough.

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    • 1 Second Ago
      • 8 Months Ago
      Europe needs commitment, and the collective realisation that Europe is worth saving. Hydbrid subsidies are not going to do that. They will help Toyota and Honda more than Peugeot.
      Mark Schaffer
      • 8 Months Ago
      "Austerity measures on top of the general European economy are keeping buyers away" Austerity is a complete and utter failure unless you want to punish the poor and former middle class for what the wealthy have done to destroy economies.
        • 8 Months Ago
        @Mark Schaffer
        It's the politicians who are at fault. Governments borrowed too much and can't repay their debts. There's a lesson for us in the USA.
          • 8 Months Ago
          throwback "It's the politicians who are at fault." Nope ! It's the people who voted for them, time after time ! (and those who didn't vote at all).
      • 8 Months Ago
      The premise of the article is false. No one in France imagines that this stimulus to electric cars on it's own will haul the country or Europe out of it's depression, which has other causes, and is a several trillion issue not soluble by a few billions here or there. What it will do is allow France to continue to have a viable automobile industry as oil gets more expensive, reduce oil import costs and let French people get around. Derigism has pros and cons. We have the disadvantages clear, in Europe's crazy attempt to impose a single currency without the social, political and taxation underpinnings needed to make it work. The advantages of France's authoritarianism will however mean that French people will benefit from light railway supplemented by excellent buses in virtually every city, with electric cars and bicycles to support them. It is going to be a lot easier for French people to continue to get around than for Americans.
        • 8 Months Ago
        DaveMart Ahem,.. do I hear a small vote of thanks to John Major for his steadfast refusal to join the Euro ?
      • 8 Months Ago
      Why do they leave everything until the last minute?
      Actionable Mango
      • 8 Months Ago
      I don't understand how an increase in the hybrid and electric subsidy will prevent the loss of a quarter of a billion dollars every month.
      • 8 Months Ago
      spending their way out of debt ? Couple a trillion in stimulus and we have very little to show for it. more people on food stamps, welfare, and unemployment than ever We should sell our Frisker and Solendra paper (loans) to the French to create more jobs in the EU. (oh yeah, Finland's already got the Frisker jobs)
        • 8 Months Ago
        EVnerdGene. Economic's just isn't that easy. Economies are very complex, and contain a host of interconnected factors which are seldom resolved by ideological doctrines. The US has a massive debt ! Just one look at the the national debt clock on , prove a bitter lesson in how even the richest nation on earth can so mismanage it's economy, by trying to achieve political/ideological objectives. The Bush and Obama administration had little option but to try and halt the total collapse of the US economy. Some institutions are 'national assets' and can't be allowed to fail. If that occurs the capital required to rebuild the asset is just too great and enterprise can't be resurrected. In that case, the wealth that asset created, is transferred to another country. This is the lesson the UK experienced between 1970-90. Even the most radical right-winger, shouldn't believe that the business of the US government is to enrich other nations at the expense of American citizens !
      • 8 Months Ago
      The solution is not to offer subsidies for this or that. The solution is to offer simply a better products. The consumers don't want anymore gasoline and diesel cars and the evs proposed are not up the task and they are wholehearthedly rejected by consumers even with subsidies and brainwash done for them by internet journalists and bloggers. The solution is to offer hydrogen vehicles with a water electrolyzer installed permanantly into the vehicle so you don't need a costly bothersome hydrogen infrastructure and instead you become part of an hydrogen making infrastructure and all that stuff can feed houses in case of a power outtage or price hack. Poverty is what is in front if europe don't adopt in a heartbeat hydrogen fuel, they can starve if petrol prices are again push up by wall street speculators. Anyone that depend entirelly on one only ressource can experience sudden death, they tried batteries just for the show but didn't expect to get off of oil for real and also it's a proven FACT that batteries didn't displaced a single drop of petrol worth mentionning even if worldwide there have been 5 to 10 billions dollars in subsidies given fraudulently to them. Hydrogen too have been subsidized with billions and all they did was making patents put in the closets and impeded form commercialisation. To date the plant of big oil, goverments and car manufacturers to protect petrol sales at all cost have been put in place all over the world and maintained like it's been done since more then 100 years.
      • 8 Months Ago
      Uhm, last I checked peugot doesnt even have a lot of EVs or hybrids. Ive never seen one vehicle in either category, so I doubt that will change anything in the short term, unless the french market is drastically different than the swedish one.
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