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A Boost For French Autos

27 May 2020 by jbchevrel

Today French auto CDS and French auto part CDS are leading the Main’s fair value tighter by almost -5bp. Yesterday French President Emmanuel Macron has announced an €8bn rescue plan to revive the French car industry. His proposal, which came during a visit to the Valeo (FRFP) car factory in Etaples, includes €1bn to provide grants of up to €7,000 to encourage the French consumers to buy electric vehicles. This breaks down to €5,000 for each company purchase and €2,000 per hybrid rechargeable car. In exchange for the exceptional measure, PSA (PEUGOT) and Renault, France’s two main car manufacturers, have promised to focus production in France. French President Emmanuel Macron said: "We need a motivational goal - make France Europe's top producer of clean vehicles by bringing output to more than one million electric and hybrid cars per year over the next 5y.” Over the past two sessions, FRFP has come -50bp tighter from 300 to 250. Similarly, PEUGOT has come -55bp tighter from 300 to 245. Even RENAUL joined the move, having come -40bp tighter from 300 to 260, name discussed Friday evening in this blog (‘Renault could disappear But it won’t’). Car sales have tumbled in the area of -80% during France’s 2-month nationwide lockdown, which ended now two weeks ago. By the end of June, it is estimated that ~500k passenger cars will have gone unsold.