September 26, 2020

French Automakers to Pay Off Government Loans Early

PARIS — In another sign of improving health at the large French automakers, the government said Thursday that PSA Peugeot Citroën and Renault would repay ahead of schedule the billions of euros in state loans provided during the financial crisis.

Éric Besson, the French industry minister, told France Info radio that the remainder of the €6 billion, or $8.7 billion, would be repaid “in the next few days,” which was “faster than anticipated.”

The decision, he said, showed that “confidence has returned” to the sector.

In 2009, amid plummeting sales and the prospect of large-scale layoffs, the French government announced that it would loan Peugeot and Renault €3 billion each over five years at 6 percent interest. Renault Trucks, now owned by Volvo, also received some aid.

In conjunction, the automakers introduced part-time work arrangements and curbed production at some plants.

But since then, the health of the two companies has slowly improved, helped initially by government incentives — now expired — for new car buyers, which lifted sales in Europe. Sales also were robust in emerging markets like Russia, Brazil and China.

A report this week from the European Automobile Manufacturers’ Association, or A.C.E.A., showed new passenger car unit sales in the European Union fell 5 percent from a year earlier in March. Sales in Germany and France both grew, but they were weaker in Britain, Italy and Spain.

The two French companies have followed the same repayment rhythm, returning a first tranche of €1 billion in the second half of 2010, then a further €1 billion in February with the final €1 billion due to be repaid on Tuesday.

This week Peugeot, the No. 2 automaker by volume in Europe behind Volkswagen, said that its sales grew 10.2 percent in the first quarter to €15.4 billion. Peugeot reduced its net debt last year by €2 billion to €1.2 billion.

In the first quarter, its sales grew 76 percent in Russia, 12.8 percent in China, and 10 percent in Latin America. That helped to offset a slight drop in European sales and the effect of supply chain problems in Japan following the earthquake and tsunami last month.

Peugeot shares have climbed 2.7 percent so far this year.

Renault, in which the government has a 15 percent stake, has lagged its domestic rival.

Its shares have fallen 11.7 percent this year. The company is recovering from an embarrassing scandal during which it accused employees of espionage, dismissed them and then offered to reinstate them when an investigation by prosecutors failed to support the allegations.

Alongside its partner, Nissan Motor of Japan, Renault has bet heavily on electric vehicles and is hoping to recoup in coming years the billions that its has invested in battery-powered models.

Renault will publish its first-quarter results Tuesday.

Article source: http://www.nytimes.com/2011/04/23/business/global/23auto.html?partner=rss&emc=rss

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