France Won't Extend National Car Rebate Program

09/30/96

Reuters has announced that the French government decided against extending a new-cars-for-old rebate program that is scheduled to expire today (September 30). A spokesman from the industry ministry made the announcement, and said that he could not say if the government would introduce any other measures to help the car industry.

The rebate program allowed French consumers to trade in old junkers and get healthy rebates on new cars. It buoyed French car sales, which rose 7.4 percent in the first eight months of the 1996. As the rebate scheme drew close to expiring, sales surged, up 29.4 percent in July and are expected to rise by about 70 percent this month, as buyers rush to take advantage of the program before it ends.

Industry Minister Franck Borotra recently voiced his support for continuing the rebates, but Finance Minister Jean Arthuis reportedly came out against them. Recent remarks by Prime Minister Alain Juppe showed little support for the scheme, as he said that the rebates appeared to have helped foreign carmakers more than French ones.

PSA Peugeot Citroen has asked the government for continued support, either in the form of rebates proportional to car prices or through a cut in the value-added tax on cars, while the recently privatized Renault SA, said it was not asking for an extension of the rebates or any other special assistance. The car companies complained that the rebates tended to skew sales toward cheaper models with smaller profit margins.

Paul Dever -- The Auto Channel