French President Nicolas Sarkozy yesterday proposed to provide "new forms of assistance, particularly in the form of loans or guarantees" for the auto industry, during a meeting with the leaders of major French automakers in the Elysee to discuss solutions to the crisis.

Sarkozy said he was prepared to provide additional aid to the industry, but on the condition that these companies do not relocate their activities. He also said the aid would be developed in coordination with European partners and the European Commission.

During the meeting, the president also asked Secretary of State for Industry Luc Chatel to reflect on the "strategic choices" concerning the organization and future challenges of the auto industry.

Chatel said the government was "ready to do what is necessary to save the automobile sector."

Senior executives of France's largest carmakers PSA Peugeot Citroen and Renault, and representatives of the auto equipment suppliers Michelin and Valeo attended the meeting.

The French auto industry creates some 10 percent of jobs in the country. However, the industry is struggling with massive problems amid the global financial crisis.

Faced with declining market demand, PSA Peugeot Citroen has planned to cut 2,700 jobs in France. Renault has announced to cut 6,000 jobs across Europe and temporarily shut down some factories.