PARIS (Reuters) -- France's auto industry faces a bleak outlook until at least early 2011 and local authorities must prepare to help struggling suppliers, according to leading government figures.
"The European car market, particularly in France, should see a deterioriation, with a likely significant drop in sales for the second half of 2010," according to a letter signed by French Economy Minister Christine Lagarde, Industry Minister Christian Estrosi and Junior Employment Minister Laurent Wauquie.
The ministers warned that the bleak outlook would last until the end of the first quarter of 2011 in a letter published in the Sunday paper Le Journal du Dimanche.
Local authorities must urgently prepare to assist struggling parts suppliers in particular, by financing strategic reviews that target possible job losses as well as helping partsmakers tap a government-backed supplier aid fund, they said.
French auto parts makers such as Faurecia and Valeo are facing decreasing demand in Europe for cars after the end of scrapping incentive schemes, with emerging markets taking up the slack.
The trend has led to more upbeat forecasts on emerging-market growth from top French carmakers Renault and PSA/Peugeot-Citroen.
French new passenger car sales for the month of September were down by 8.1 percent, according to industry association CCFA.