Rescue package for French car makers

The French government has given car manufacturers Renault and Peugeot-Citroen a rescue package including 7.5 billion euro (£6.5bn) of low-interest loans in return for a promise that no workers will be made redundant this year.

Both Peugeot-Citroen and Renault will receive a five-year loan of 3 billion euro (£2.6bn) at an interest rate of 6% to help finance investment in producing low-polluting vehicles and to ensure no factories will close during the economic downturn in 2009.

A further 500 million euro (£437m) will be loaned to Renault Trucks, which is owned by Volvo of Sweden, under the same conditions.

A total of 1 billion euro (£0.87bn) will be given by the Societe de Financement de l'Economie Francaise, which was set up by the government to help banks overcome the financial crisis, to the financing arms of Renault and Peugeot-Citroen doubling an existing facility set up in December.

It is hoped the loans will help the car makers give credit to consumers who want to buy a new car.

President Nicolas Sarkozy said the measures were needed "because the crisis hitting the automobile industry is exceptional."

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