More European automakers looking for government bailout

It is not just Detroit automakers, who last week pleaded for a 25 billion bailout from the US government, who are asking for cash.

ACEA, the European Automobile Manufacturers Association, has asked the EU for a 40 billion euro loan to invest in the development of greener cars. European automakers have requested the loans come from a proposed 130 billion euro stimulus package the EU Commission is putting together to spur economic growth in Europe.

The automakers say they need the money to invest in technologies that will allow them to meet future EU CO2 emissions standards. According to EU rules, automakers will have to reduce their average CO2 fleet emissions from 158g/km today to 130 grams per kilometer by 2012.

But the EU commission itself is divided on whether to help automakers. Industry Commissioner Guenter Verheugen favors aid for the automotive industry while Competition Commissioner Neelie Kroes has voiced concerns that the subsidies might violate competition rules of EU.

Also, Jaguar is currently in talks with the UK government for a 1 billion pound bailout package for the troubled British premium brand.

European automakers are not in the dire financial situation that Ford and GM are in the US. In fact, Ford of Europe is profitable and is projected to remain in the black even in 2009, which is expected to be a bad year for car sales in Europe.

But European automakers are experiencing a substantial contraction in sales and revenues that will hamper their ability to invest in future products right at a time when the market is demanding more fuel efficient vehicles. And when governments are rushing to be seen doing something about the global economic crisis, it's a good time to come tin cup in hand.