Announced by the French minister of industrial recovery, Arnaud Montebourg, the Automobile Plan is designed to sustain production, employment and R&D within France, backed by all involved parties including state and local authorities, vehicle and component manufacturers, contractors, distributors and service providers.

The French car industry has had a tough decade. Employment has declined by 30% over ten years, and against a 3.5m unit volume in 2005, the sector is predicted to manufacture 2.2m vehicles in 2012. French-manufactured vehicles account for a third of all models sold in France.

But with the country’s largest manufacturers – PSA and Renault – both developing electric and hybrid vehicles, electromobility is seen as a priority area for France. The plan includes raising the electric vehicle subsidy from €5,000 to €7,000, while the hybrid subsidy will be doubled to €4,000 – also available for vehicles manufactured outside France.

The lowest polluting conventionally-powered vehicles will be incentivised too, with additional subsidies financed largely by raising tax on the least efficient models. Financial incentives will be finalised during the 2013 Finance Act.

Montebourg told the French government: ‘The hybrid car is the new frontier with new uses for many citizens, whatever their income level. We support them by doubling the bonus, which will also financed by the penalty on the most polluting cars.’

A quarter of the state-owned vehicle fleet will be hybrid or electric vehicles, with all urban-use cars to be electric. The French government will invest €50m to accelerate the deployment of public charging posts, and is seeking additional investment by the European Investment Bank.

The plan is also aimed at encouraging co-operation between involved parties, and will establish a research instuitute with PSA, Renault, OEMs and universities to develop future technologies domestically. A planned €600m funding package will be co-ordinated by the government to maintain the liquidity of small domestic companies developing components for the automotive industry,

France will also put pressure on the European Commission to re-assess the free trade agreement with South Korea, which has a booming automotive industry.

Both of the country’s largest manufacturers have welcomed the announcement. Commenting, Carlos Ghosn, chairman and chief executive officer of Renault, said: ‘Renault welcomes the government’s determination to support the French automotive industry. The Group is especially pleased with the strong gesture made in favor of clean vehicles, and electric vehicles in particular.’