Legitimate aid for Renault?

On Wednesday, the French carmaker Renault moved a decisive step closer to securing 20.5 million euros ($27.7 million) in state aid for the development of a utility car fitted with a diesel-hybrid engine.

The European Commission approved the shot in the arm for the ailing automaker, which had been suffering from low demand on the domestic market and elsewhere as the Continent continued to be in the grip of a protracted debt crisis.

Brussels has ruled that the state aid in question would not run afoul of EU competition rules and would only go toward easing the impact of current market failures in the bloc.

The EU executive said the aid to be granted by the French government included direct subsidies as well as advance payments for research on and development of the hybrid technology to be paid back at a later stage.

Mixed outlook

"This project by Renault contributes to enhancing fuel efficiency and lowering carbon dioxide emissions, and it will also strengthen the EU's innovation drive," Competition Commissioner Joaquin Almunia said in a statement.

A study by the French automotive industry group CCFA indicated a slight pickup on the domestic car market in recent weeks, with the number of new vehicle registrations up by 3.4 percent in September. Renault was cited as one of the biggest winners of that development.

The group warned, however, that the pickup might not be sustainable, adding that it expected full-year registrations to drop by 8 percent because of a devastating start to 2013 and a lot of uncertainties still around.

hg/mkg (dpa, Reuters)