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The French government could take a bigger stake in its battered carmakers in return for financial aid, Industry Minister Luc Chatel has said. The government is set to meet car firm chiefs on Tuesday and announce an aid package plan to help them cope with the impact of the economic crisis. President Nicolas Sarkozy earlier promised that France would put "a lot of money" into aid for the carmakers. The car industry is one of France's biggest employers. Aid plans Economy Minister Christine Lagarde said last week the government was set to announce measures to boost carmakers' capital and improve financing for car purchases. However, Mr Chatel said in a newspaper interview on Monday that nothing had been decided. "Carmakers' needs are not necessarily in the form of boosting their capital but in exchange for our financial support taking a stake in (companies') capital can, in some cases, be a fair trade," he told Le Figaro. This support plan will not be a gift - carmakers will notably have to commit to keeping industrial sites in France A new 300m euro (£270m; $397m) state-support fund for the industry would be launched ahead of a broader rescue package to be unveiled in late January, he said. The French government, which already owns a 15% share in Renault, is also pressuring carmakers not to pay a dividend to their shareholders in exchange for state funds. Another newspaper, Le Parisien, reported the broader rescue package could eventually be worth between 5bn and 10bn euros, and said the government was considering other measures such as deferring tax payments for carmakers' suppliers. Mr Chatel did not give any details on how the state would help France's biggest carmakers such as PSA Peugeot Citroen and Renault, but said several options were being considered. "Loans at favourable rates, loan guarantees, convertible bonds - we are studying all the possibilities." "The major issue is what is given in exchange. This support plan will not be a gift. Carmakers will notably have to commit to keeping industrial sites in France," he said. He said the plan would also cover foreign carmakers with sites in France. France has been in talks with the European Commission over the plan and Ms Lagarde said last week she had asked the Commission to coordinate EU aid to the car sector. Mr Chatel said there were limits to what the Commission would accept. "There are some measures that it is not prepared to allow - it is notably hostile to fiscal aid for a single sector. In any case, we will be acting within the broader framework of a European action plan," he said.

DATED: 20.01.09

FEED: AW