Paris (CNN Business)French President Emmanuel Macron has announced an $8.8 billion aid package for the country's embattled auto industry, which has seen sales tank during the coronavirus pandemic.
Macron said around 400,000 cars are sitting in factories and parking lots unsold with an 80% drop in sales compared to the same time last year.
"By the end of June, we will probably be at around 500,000 unsold vehicles compared to the previous season. This is unprecedented for this sector, which represents nearly 16% of our industry's sales," he said. Roughly "4,000 companies and 400,000 employees [are affected by this pandemic], and nearly double that if you take into account production and services."
Macron outlined the aid package during a visit to a Valeo (VLEEY) factory for electric car parts in Northern France.
The plan is to heavily incentivize consumers into buying new cars by providing government subsidies to the tune of over $7,000 off electric vehicles and $2,000 for a hybrid. The hope is that it will send consumers back into dealerships and boost consumption, he said.
The bailout is aimed at making the industry greener by turning France into the biggest electric car producer in Europe over the next few years. Some of the bailout money will go towards modernizing production lines, according to the plan.
In exchange for the bailout, the French auto industry is expected to keep its production in France and even bring back some production, especially environmentally friendly technology.
For ailing French carmaker Renault, these measures could represent a lifeline. The group was crippled by the health crisis, with its French factories all shut down mid-March. They're expected to announce a €2 billion Euro cost-cutting plan later this week.
--Ya Chun Wang contributed to this report.
