Renault and PSA/Peugeot-Citroen are increasingly worried about the financial health of their suppliers and are looking for ways to help them, senior executives said today.
Suppliers are losing business as car sales plummet during the economic crisis and automakers are forced reduce production.

PSA CEO Christian Streiff said his company considers 85 of its suppliers to be in significant financial difficulty.

Streiff told a French senate hearing that buying a stake in suppliers was not part of the company's strategy, but that it would do its best to help struggling equipment makers.

PSA already owns 71 percent in parts maker Faurecia.

Renault would consider buying stakes if necessary, Chief Operating Officer Patrick Pelata said.

The two French carmakers have passed a combined 2 billion euros ($2.7 billion) of loans totalling 6 billion euros granted to them by the government to their supply chains, by cutting payment times, Pelata said.

"Equipment makers are facing the same constraints as carmakers. In certain cases, we must find solutions together. That could be a stake purchase or a restructuring. We must find solutions that aren't simply like sticking a plaster on a wooden leg," Pelata said.

The executives were being questioned by the French senate after the government pledged loans of 3 billion euros to each carmaker to invest in developing new green technologies, as well as extra help for their financing arms and for suppliers.

Renault and PSA shares have lost respectively 18 percent and 23 percent since the beginning of the year, after drops of 81 percent and 77 percent in 2008.