The French Government will offer car buyers grants of over £6,000 and drive domestic vehicle manufacturing through a £7.1 billion COVID-19 recovery package for its automotive sector.

President Emmanuel Macron outlined the funding boost for motorists considering making the switch to electric vehicles (EV) and also committed cash to investments aimed at making France a centre for electric vehicle output as part of its recovery from the COVID-19 coronavirus output.

France is now poised to increase the state-provided grant towards an electrified vehicle purchase from 7,000 euros (£6,243) from 6,000 (£5,342).

Car buyers looking to invest in a traditional car will receive a 3,000-euro bonus under a scheme, meanwhile, as part of an effort to help car retailers sell and estimated 400,000 left in stock following the COVID-19 coronavirus lockdown.

Around 75% of households will be eligible for new car grants which encourage the purchase of low-emission, electrified vehicles.

In a speech delivered at the Valeo car factory in Etaples, northern France, yesterday (May 26), Macron said: “Our fellow citizens need to buy more vehicles, and in particular clean ones. Not in two, five or 10 years – now.”

Following reports that Renault vehicles could be produced at Nissan’s Sunderland production plant, it emerged that it and the PSA Group had both promised to focus production in France in return for the relief.

The French government is also understood to be in negotiation with Renault over a potential loan guarantee of around £4.45m after it saw domestic production slump by more than 90%.

Macron said: "We need a motivational goal - make France Europe's top producer of clean vehicles by bringing output to more than one million electric and hybrid cars per year over the next five years.”

Earlier this month the PSA Group confirmed that it was in talks with the UK Government about the possibility of car scrappage scheme incentives to boost the automotive retail sector in the wake of the COVID-19 coronavirus crisis.

Alison Jones, managing director of Peugeot, Citroën and DS Automobiles in the UK, told BBC Newsnight that, while she did not expect demand among car buyers to “come back” until Q4, a CO2 emission-based scrappage scheme was being discussed.

News of the discussions with the UK Government came just a week after the ICDP's ‘clean cars for a post-COVID recovery’ report warned that a CO2 emissions-reducing car scrappage scheme was needed in order to avoid a perfect storm of stalled sales and soaring fines from stringent new EU regulations driving carmakers ‘to the edge’.

“Without intervention in the market a recovery is likely to be protracted and this will lead to business failures amongst dealers, and potentially with manufacturers," the report said.