France has pledged three billion euro in loans for struggling car makers PSA-Peugeot-Citroen and Renault, saying the two companies had promised to safeguard French jobs in return.
President Nicolas Sarkozy offered the two carmakers a total of six billion euros in five-year, 6% interest rate loans to fund investment into clean vehicle technologies.
He said they had pledged not to close any French sites during the loan term and agreed to "do everything" to avoid further job losses.
France is the latest European country to pledge to help its automakers. Italy on Friday promised two billion euros for the flagging sector.
Some of France's EU partners have already protested over efforts by President Sarkozy to protect French factories from the impact of the economic crisis and the European Commission said it would scrutinise his auto plan.
PSA chief executive Christian Streiff and Renault chief operating officer Patrick Pelata said their firms would not launch redundancy plans this year.
Mr Pelata said the initial 6% loan rate would rise if the companies' results improved.
Industry secretary Luc Chatel told reporters the terms of the aid for the sector foresaw management foregoing bonuses.
Asked whether dividends would be paid to shareholders, he said the priority would be investment.
Falling car sales worldwide have hurt the French car industry as the credit crunch and worsening economic climate put the brakes on consumer spending.
