builders go to checkout

This is the parade of the government in the face of the controversy over the carbon tax: change car! While threatening a protest on November 17, with a citizen movement, relayed by the platform Change.org, which plans to block the highways to request a reduction in fuel taxes, the government will finish in the coming hours to set up a "conversion premium" abounded by manufacturers, to encourage the purchase of a less greedy or even electric vehicle.

The contours are still unclear at this stage, but Bruno Le Maire can already announce in Paris that he will ask "the car manufacturers to participate in the premium, it will have to be more efficient and touch more French". This premium remains for the moment limited to 1000 or 2000 € depending on household income, it can even go up to 2500 € for the purchase of an electric vehicle. It's both too much and too little. Too much for public finances, which are currently overwhelmed by demand: more than 70,000 people have been waiting four months for the payment of their premium, because the agency in charge of the payment does not have the necessary funds. 500,000 premiums were envisaged over the whole five-year period, 250,000 were already declared in just a few months. Bercy thought he would hold the expense at a few hundred million Euros, and could finally end up with more than 1 billion to pay.

But it is at the same time too little to calm those who revolt against fuel prices, the recent recalibration of the premium towards the most modest households having obviously had no effect on protest movements

"Stay on course"

The government does not intend to go back on the carbon tax: "a good policy is to stay on course" says Bruno Le Maire, "we will not go back", and we therefore maintains an expected increase of 6 cents per liter of diesel and 3 cents per liter of gasoline carbon tax. In these conditions it remains only to put the manufacturers to contribution. This is already the case with a hardening of the penalty on the biggest displacements (the manufacturers will have to arbitrate between an integral repercussion on the prices of the vehicles or a reduction of their margins) which must allow to release an additional 40 million Euros for a total increased to 610 million next year.

But this will probably be amplified in conditions that remain to be defined, and which will not be too painful for the builders. Many of them already have such commercial reductions in their arsenal of sales, it will be enough to convert them into "government premium" to please the government and allow him to affirm that he "hears the anger of the French".

The market remains buoyant (Renault raised its forecast to 4% increase in the year 2018) and such a premium may come a bit early to counter the cyclical downturn, but Emmanuel Macron, receiving in early October the leaders of the world car, had put in the balance the weight of France in the European negotiations on the new standards of CO2 emission. Basically, pull out the checkbook, and we will try to limit to 30% (instead of 40%) the CO2 reduction efforts required by Brussels (a comparable deal is also under discussion in Germany). The government also wants to defend itself by highlighting the rise in oil prices, "on 20 cents of increase for a year, more than 16 cents result from the increase in the price of a barrel," says Bruno Le Maire. He obviously knows that this argument no longer bears.