Germany, France to work together for car industry

PARIS (Reuters) - France and Germany will work together to help their ailing automobile industries, focusing on new technologies to make sure Europe maintains a major role in the sector, the two countries said on Thursday.

Like in many other parts of the world, car sales slumped in Europe at the end of 2008 and some analysts are predicting a further 15 percent decline this year, with the industry bearing the brunt of battered consumer confidence.

Germany and France are home to Europe's biggest carmakers and French President Nicolas Sarkozy and German Chancellor Angela Merkel discussed the sector during talks in Paris.

"We agreed today to work closely together on the future of cars," Merkel told a joint news conference, adding that the development of alternative engine technologies would determine which countries are leaders in car production.

"We are seeing very strong state support for the car industry in the United States. We are confident enough in Germany, France and Europe to say: the car was invented here and we will also build the cars of the 21st century and be competitive," she added.

U.S. President George W. Bush has approved a $17.4 billion (11.4 billion pounds) bailout for two of the biggest U.S. carmakers, Chrysler and General Motors, to help them survive the downturn.

European governments and the European Commission have also pledged to help the continent's car industry, which in Europe employs 2.2 million people directly and a further 10 million in related industries and services.

(Reporting by Crispian Balmer and Noah Barkin; Editing by David Holmes)