January 21, 2009 / 11:16 AM / 9 years ago

France calls for auto bosses to give up bonuses

PARIS (Reuters) - France’s economy minister Christine Lagarde on Wednesday called on top car industry bosses to forfeit their bonuses in return for state aid, as Asian manufacturers faced a fresh round of bad news.

<p>France's Economy Minister Christine Lagarde delivers a speech during a one-day summit on the French car industry in Paris January 20, 2009. REUTERS/Benoit Tessier</p>

The worsening outlook for global auto sales led Moody’s to place Hyundai Motor Co and Kia Motor Corp’s ratings under review for possible downgrade.

Many automakers are expecting sales to decline more in 2009 than they did in 2008 as a lack of finance, a deepening recession in major markets and weak consumer confidence batters the car market.

European auto sales fell 7.8 percent year-on-year in 2008.

The Malaysian Automotive Association warned that sales in Malaysia could drop 12.4 percent in 2009, due to the impact of the financial crisis on consumer spending.

In Europe, France’s auto industry digested Tuesday’s pledge of 5-6 billion euros of state aid, as economy minister Christine Lagarde said that as well as pledging to safeguard jobs in France, bosses at PSA Peugeot Citroen and Renault should give up their bonuses.

Renault Chief Operating Officer Patrick Pelata said on Tuesday at a summit meeting between the French government and the country’s struggling auto industry that Renault bosses had known since June that they would not be receiving bonuses, which are linked to the company’s financial performance, for the year.

“I think they will have a sufficient sense of responsibility to take these measures themselves but it would seem absurd to me to put state money ... into industrial sectors, into carmakers Renault or Peugeot, and for company boards to decide to award super bonuses with that money,” Lagarde told RTL radio.

A PSA Peugeot Citroen spokesman said it was too early to say whether board members, including CEO Christian Streiff, would get bonuses as this would be decided by a remuneration committee once full-year results, due to be published in February, were known.

Streiff said this week 2009 would be a “terribly difficult” year.

French prime minister Francois Fillon announced on Tuesday at the auto summit that France would make up to 6 billion euros ($7.79 billion) available to car manufacturers, on condition that they pledged to safeguard jobs in France.

In Germany, ball bearings manufacturer Schaeffler denied a report in German newspaper Handelsblatt that it was considering breaking an agreement with automotive supplier Continental AG and seeking full control. Continental shares jumped almost 14 percent in early trade, but sank back later in the morning to trade around 3.50 percent higher, after Schaeffler denied the report.

($1=.7705 Euro)

Additional reporting by Francois Murphy, Julie Goh and Marilyn Gerlach, editing by Marcel Michelson/Richard Hubbard

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