SEPTEMBER 1, 1997
Prost and the government
ALAIN PROST's three-year deal with Peugeot may be affected by the new French government's plans to hike the price of diesel fuel in France. According to very good French sources Prost's deal with Peugeot was cemented by a French government guarantee that it would postpone taxes on diesel for three years. With nearly half the new car registrations in France being diesel cars this was a big incentive. The new government, however, is desperate to raise as much money as possible as it tries to balance its books to be part of the planned European Monetary Union at the start of 1999, and may not honor the promises of the previous administration. As a result Peugeot will not be getting the extra sales it had hoped for and could simply decide to dump Prost. The company needs to make dramatic cutbacks to become more efficient but is not being allowed to do so by the government which promised to create hundreds of thousands of new jobs.
The French daily newspaper Le Monde is reporting that a socialist working group is proposing an increase in diesel taxes of 10% a year for the next five years, but the government is scared that such a price hike will upset truck drivers who have crippled France with strikes on several occasions in recent years. French Prime Minister Lionel Jospin is expected to make a decision on the matter before the end of this month.