Car companies request €40bn loan from EU bank
Monday, December 29, 2008The next two weeks will be decisive for Europe’s beleaguered carmakers as they appeal to Brussels for support in the face of tumbling demand and scarce credit.
The carmakers have requested a €40bn ($51bn, £34bn) soft-loan package from the European Investment Bank, the EU’s long-term lending institution. The issue was discussed by the EIB’s board of directors on Tuesday, according to people close to the institution.
EDITOR’S CHOICE
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Ivan Hodac, head of ACEA, the European Automobile Manufacturers Association, said: “It is not a bail-out. It is a soft loan to invest in more fuel-efficient technologies.”
Carmakers also hope that the European commission may encourage member states to adopt “scrapping” incentives, in which car owners would be offered tax breaks for turning in older vehicles to buy new ones.
The hope is that such a programme will stir demand after car sales in western Europe fell 15.5 per cent last month. Mr Hodac argued that it would also help to put more fuel-efficient cars on the road at a time when Europe is trying to curb carbon emissions.
Separately, senior EU officials made clear their concern over possible US state aid to the car industry, asserting that one option might be to complain to the World Trade Organisation if this was felt to be unfair. A key consideration could be the extent to which non-US carmakers were entitled to participate in the plan.
José Manuel Barroso, president of the European Commission, said on Friday the package was being analysed.
In terms of the EU’s own assistance to the car industry, this would have to comply with the bloc’s state aid guidelines, EU officials responsible for competition policy said. These started from the principle that governments should not be allowed to distort competition. They also acknowledged that there were certain circumstances in which state aid might be necessary, officials said.
“Neelie Kroes, EU competition commissioner, said: R&D aid, innovation aid, environmental aid ... this is the type of government support that looks to see where our entrepreneurs need help and what government can do to help them.”
Source - Financial Times
