Traffic in front of Arc de Triomphe monument in Paris, France

France asks automakers to help fund trade-in scheme to drive eco-friendly car sales

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French finance minister Bruno Le Maire told daily Le Parisien on Sunday that the government will ask automakers to help fund an expanded trade-in programme, to get older, polluting cars off the road in attempt to encourage their citizens to buy more environmentally-friendly cars.

France’s existing government-funded scrappage scheme, which mainly targets old diesel cars, is already oversubscribed. Le Maire said he will now hold meetings with environment minister Francois de Rugy and carmakers such as Renault and Groupe PSA (which includes Peugeot and Citroën), to “discuss measures aimed at speeding up the vehicle fleet’s ecological transition.”

“With Francois de Rugy, we will ask carmakers tomorrow to contribute to the conversion premium,” Le Maire told Le Parisien, adding that the incentive should be more efficient and reach more French people. He also said the level of carmakers’ contribution to the wider scheme would have to be discussed with himself and the environment minister in the meetings.

The widening of this incentive is partly funded by the hardening on tax for polluting vehicles, which was adopted last Tuesday by French authorities. This tax should raise €40m to reach a total of €610m next year to finance contributions for the purchase of more environmentally friendly cars.

Last week, French newspaper Le Echos said French carmakers were already discussing between themselves the implementation at their expense of a bonus for the conversion of old vehicles in the automobile market.

Following German carmaker Volkswagen admitting to cheating US exhaust tests back in 2015, there has been a global backlash against diesel-engine cars. This scandal has resulted in a boost for investments in creating more electric vehicles and incentives for green cars.

German chancellor Angela Merkel and her coalition partners agreed earlier this month on plans to cut pollution from diesel vehicles by asking carmakers to offer owners trade-in incentives and hardware fixes.

However, carmakers have said that the focus should instead be on encouraging car owners to trade in their older diesel models for cleaner vehicles. This transition would bring a boost in sales, although at discounted prices.

On Thursday, Volkswagen said it will offer trade-in incentives and a bonus for scrapping older diesel vehicles in Germany.

Separately, Le Maire has dismissed calls to reduce taxes on fuel prices which have surged at French petrol stations after a spike in crude oil, saying that this would contribute to climate change.

France’s 2019 budget includes an increase in diesel taxes of more than six cents per litre and those on unleaded fuel by almost three cents, an increase that the French government has tried to downplay by comparing it to increases in oil prices.

In September 2018, Volkswagen announced its collaboration with other carmakers to develop a set of common standards for self-driving vehicles, with the group discussing the initiative with more than 15 potential partners.

Also, in September last year, the French government were in the process of planning a rollout of new incentives and taxes to stimulate the replacement of petrol and diesel vehicles, as well as increasing the use of energy-saving insulation in houses and hiking the carbon tax.

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