France's auto industry faces a bleak outlook until at least early 2011 and local authorities must prepare to help struggling suppliers, policymakers warned in a letter published in Sunday paper Le Journal du Dimanche.
The letter was signed by French Economy Minister Christine Lagarde, Industry Minister Christian Estrosi and Junior Employment Minister Laurent Wauquiez, the newspaper said.
"The European car market, particularly in France, should see a deterioriation, with a likely significant drop in sales for the second half of 2010," the ministers wrote, adding the bleak outlook would last until the end of the first quarter of 2011.
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 them tap a government-backed supplier aid fund, the paper said.
French auto parts makers like Faurecia and Valeo are facing waning 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.