France Mulls Aid to Auto Industry

The French government says it is considering a plan to support the company's ailing carmakers by offering incentives to car buyers or tax breaks for more fuel-efficient vehicles.

Carlos Tavares, COO of Renault SA, urged Paris on Tuesday to bolster the country's slumping auto market. He suggested a revival of a program that offers rebates to customers who trade in old vehicles for new, more fuel-efficient models.

Industry Minister Arnaud Montebourg declares that the country's new Socialist government is "completely open and in favor" of incentives or tax breaks. President Francois Hollande was elected last month on promises to revive the stalled French economy, temper austerity measures and preserve jobs. Hollande also has vowed to block General Motors Co. and PSA Peugeot Citroen from closing plants in France.

But analysts question whether Paris will be able to muster the funds to boost car sales amid heavy pressure to slash its budget.

Sales of new passenger vehicles in France dropped 17% year on year to 840,200 units in the first five months of 2012, according to auto trade group CCFA.