European Union governments step up help for car makers and auto industry
Iflove.com presents: Eu governments seek more help for auto industry. European Union governments agreed on Friday to step up help for their straitened car makers but called for a coordinated response to avoid a race for subsidies among the bloc’s 27 nations.
European Union governments step up help for car makers and auto industry. BRUSSELS, Jan 16 – European Union governments agreed on Friday to step up help for their straitened car makers but called for a coordinated response to avoid a race for subsidies among the bloc’s 27 nations.
Officials also sought early talks with the new U.S. administration. EU countries are worried that large subsidies for struggling U.S. automakers would disadvantage the European sector, hit by widespread lay-offs and production stoppages.
Details of European support are yet to be worked out but are likely to include tax incentives to buy new, environmentally friendlier cars, subsidies to scrap old vehicles and more loans for manufacturers from the European Investment Bank, the European Union’s financing arm.
“Public support for this sector is decisive … There is a clear need to discuss public aid initiatives,” European Union Industry Commissioner Guenter Verheugen told a news conference.
Speaking after a meeting of senior EU government officials, Verheugen said the bloc needed “early dialogue with the new U.S. administration on the future of the automotive industry on both sides of the Atlantic”.
Verheugen said the EU’s car industry, which accounts for 12 million jobs, was expected to see sales falling 10-20 percent this year after an 8 percent drop in 2008 as people avoid buying new vehicles amid financial uncertainty.
Aid to buyers and producers should be coordinated and use all flexibility available under strict competition and state aid rules, he said, ruling out any relaxation of existing laws.
“Any race for subsidies is to be avoided … The primary responsibility to respond to these challenges rests with the industry itself,” he said.
The EU’s executive arm wants to coordinate any intervention, learning lessons from the banking crisis where initially several states such as Ireland and Germany took unilateral steps that angered neighbours.
EIB ROLE
British business minister Peter Mandelson, taking part in the meeting, said: “It is important to have a level playing field; We should not compete against each other.”
The European Investment Bank, which issues bonds to secure funds for projects sponsored by the EU, could step up its help for car makers suffering from a freeze in commercial bank lending caused by the global credit crunch.
Say must have coordinated response
Could include incentives to buy greener cars
Subsidies to scrap old cars possible
More loans seen for carmakers from EIB
Early talks with new U.S. govt sought (Updates with details, background)
“The representative of the European Investment Bank indicated that the bank is ready to discuss with the European Commission and the member states whether the schemes that are already in place can be furthered in terms of rapid availability and project financing,” Verheugen said.
The Czech presidency of the EU and the European Commission will prepare concrete proposals for the bloc’s summit in March.
The EIB has already pledged some 8 billion euros ($10.6 billion) in extra lending over the next two years for car makers to help them meet the EU’s strict carbon dioxide emission levels.
This was far from the 40 billion euros in aid sought by the industry.
Some governments have announced aid schemes.
According to the Commission, France has pledged 400 million euros for research and development over four years and 300 million for restructuring the automotive sector.
French President Nicolas Sarkozy said on Thursday that France would put “a lot of money” into aid for the struggling car industry.
Sweden has announced a 2.6 billion euro package for the automotive sector while Germany has promised an exemption from annual tax for new cars purchased before June 30 and an incentive to scrap old cars worth 2,500 euros per vehicle.
Eu governments seek more help for auto industry. European Union governments agreed on Friday to step up help for their straitened car makers but called for a coordinated response to avoid a race for subsidies among the bloc’s 27 nations. Editing by Jesephine Tayler
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