PARIS -- France will offer companies the same tax credit for gasoline cars as for diesel cars, removing a key incentive that has boosted sales of diesel models.
"We will to give gasoline the same tax benefit that diesel currently has," Segolene Royal told France 2 television today.
Currently companies buying diesel cars can get a bigger VAT (purchase tax) rebate than for gasoline cars.
Royal said the government will not completely scrap the diesel tax break because of the importance of diesel sales to the French car industry. A high proportion of Renault and PSA Group's new-car sales in France and the rest of Europe are diesels.
The revised tax discount will take effect gradually over the next two years. The government wanted to allow enough time to transition towards clean transportation, Royal said.
Popularity of diesel
European auto buyers have been attracted by both the lower pump price and better fuel consumption on diesel cars.
Around 68 percent of cars and light commercial vehicles on French roads were using diesel at the beginning of 2015, prior to Volkswagen Group's admission that it had cheated U.S. diesel-emissions tests, according to the CCFA, France's carmakers' association.
The scandal drew attention to the potentially harmful effects of diesel-car emissions after Volkswagen admitted that it installed cheating technology in nearly 11 million of its diesel vehicles worldwide.
Automotive News Europe contributed to this report