Germany, France reach deal to support European car industry

Germany and France have agreed on a "joint approach to securing the future of the European automotive industry," aimed at reducing emissions and cutting red tape, the two governments said on Friday.

"Our shared ambition is clear: to successfully transform our automotive industry while maintaining our climate ambition and ensuring that the cars of the future are produced in Europe," a joint statement said.

The proposals - aimed primarily at policymakers in Brussels - seek to strengthen the European car industry, which has been under heavy pressure due to the mass import of affordable electric or hybrid vehicles, often from China.

The Franco-German agreement "provides concrete incentives for investment, research and development, European production, and resilient supply chains," the statement says.

"A good day for car drivers and for jobs in Germany, France, and Europe," German Chancellor Friedrich Merz wrote on X of the agreed measures. "This is an investment signal to industry," he said.

"We are driven by a clear ambition: to successfully transform our automotive industry while upholding our climate goals and our production in Europe," French President Emmanuel Macron posted.

According to a report by Handelsblatt newspaper published on Thursday, the deal could also lead to a relaxation of the planned ban on new combustion-engine cars in the European Union.

Merz and Macron have agreed in principle to require carmakers to cut average emissions by only 90% from 2035, without having to offset the remaining 10%, the report said.

Late last year, the European Commission proposed allowing new combustion-engine cars to be registered after 2035, revising the bloc's previously agreed phase-out.

Germany had pushed for the reversal, while France had previously opposed a relaxation of the planned ban.

The agreement between the bloc's two largest economies could help secure a majority among EU member states and policymakers in Brussels.

"We hope that this Franco-German dynamic can swiftly lead to an agreement with our partners, for our jobs and our industry," Macron wrote.