Those who would heap assistance on suffering car industries are being warned that protectionism must not be tolerated, Brussels has reiterated. The European Commission is vetting support schemes from France, Spain, Britain, Italy, Germany and Sweden.
The French state loan to Renault and Peugeot-Citroen on condition no factories close in France raised initial concern over a possible breach of single market and state aid rules. But Competition Commissioner Neelie Kroes has said close contact with the French authorities should eventually provide a solution. Kroes said: “If we are just backing protectionism, it is indeed the biggest mistake we could make. It is absolutely old-fashioned in our wording and in our dictionary for we took the decision to go for the single market. And the single market, also for the car industry, is just bringing tremendous advantages. So, having said that, and repeating myself, it’s not only a single market for car sales, it is a real single market for car production too.” The EU’s car industry till recently had 780 billion euros in annual sales. Now hard times have struck, it is holding out its hand for 15 billion euros to help it through 2009. It suggests Brussels should try harder. Ivan Hodac, of the European Automobile Manufacturers’ Association said: “The scrapping schemes and the fleet renewal schemes we know they help. It has been clearly demonstrated in Germany, in France and other countries. Maybe there is European money that could be used for those schemes. I think the EC should look for those things.” The Commissioner for industry noted structural problems existed before the crisis and the auto makers have been urged to first address the downturn themselves. The industry says the biggest challenge is getting enough credit.