EU To Assess Car Bailouts

European Union says it will take only 'a couple of weeks' at most to decide if bailouts for car makers in six EU nations can go ahead.

BRUSSELS (AP) -- The EU said Wednesday it will take only "a couple of weeks" at most to decide if bailout plans for car makers in six European Union nations can go ahead.

European Union antitrust chief Neelie Kroes said reviews of rescue deals from France, Britain, Spain, Germany, Italy and Sweden will be made by mid-March, taking "from less than a week to a couple of weeks."

The EU executive checks large state payouts to make sure they do not give car makers an unfair edge over rivals elsewhere.

Condoning protectionism "is the biggest mistake we could make," she told a news conference.

Standing next to her, EU Enterprise Commissioner Guenter Verheugen cautioned Washington to respect world trade rules in its steps to secure the future of American car makers.

"We have absolutely no interest in seeing the American car industry collapse. But what is done to prevent such a collapse must, of course, be in line with international (trade) rules," he said.

He added that the EU "will not hesitate to take any necessary measures should these rules not be respected" -- which implies taking legal action against the U.S. at the World Trade Organization.

The recession is knocking the air out of Europe's car industry -- the world's largest -- which produces more than 18 million vehicles a year. Some 12 million jobs depend on the sector, which saw car sales slump by 27 percent across Europe in January, with truck sales down 35 percent.

Verheugen said it is up to European governments to help car makers, but the EU is ready to provide complementary aid to boost the sector's competitiveness through retraining schemes, funding for greener cars, incentives to scrap old cars, research and development aid and other initiatives.

He explicitly ruled out an EU-wide bailout for car makers.

Europe's auto industry is not happy with the aid currently on the table. They are due to receive euro3.8 billion ($4.9 billion) in low-interest loans from the European Investment Bank next month. The loan will eventually be increased to euro6.8 billion.

The European car lobby ACEA on Wednesday called for the EIB to provide aid worth euro40 billion ($51.2 billion).

But it is also urging the EU leaders -- who meet in Brussels Sunday -- to focus on restoring financial markets, including credit for potential car buyers.

"The most pressing issue (is) limited access to credit due to the nonfunctioning of the financial market," the ACEA said in a statement.

Support measures for European car makers run into many billions of euros yet are hard to quantify.

They are a smorgasbord that include cheap loans to develop cleaner models, various tax breaks, aid to scrap older cars, worker retraining schemes and bonuses for people who buy cars with particle filters.

The French plan -- euro7.5 billion for the Peugeot Citroen and Renault car companies -- has triggered East European complaints of French protectionism because Paris had hinted it would like companies to shift production from low-wage nations back to France.

Kroes said she was confident that the French plan would not attach these kind of conditions.

In the United States, General Motors and Chrysler have asked for a total of $39 billion (euro30.5 billion), and have received $17.4 billion so far in loans and other aid.

Workers at GM's Opel and Saab plants plan to strike Thursday as the company looks at slashing costs and seeks bailouts from the EU nations where it has plants. Sweden has ruled out helping bankrupt Saab.

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