France is to ask the European Union to put its Free Trade Agreement with South Korea under surveillance as part of a recovery plan for its auto sector, according to elements of the plan obtained by AFP.

The plan, to be presented to cabinet Wednesday, will also boost purchasing bonuses for buying environmentally friendly cars and see the government committing to 25 percent of its new vehicles being electric or hybrid.

The plan is aimed at rescuing France's struggling auto-making industry which has been hit by falling European sales.

France's biggest carmaker Peugeot earlier this month announced it was cutting 8,000 jobs and on Wednesday revealed it had suffered a first-half net loss of 819 million euros ($989 million).

The plan will see France asking the European Union to put the South Korea agreement, signed in 2010, under surveillance to "defend the interests of the French automobile industry".

The plan will boost bonuses for purchasing electric cars from 5,000 euros to 7,000 euros and for hybrids from 2,000 euros to 4,000 euros.

It also provides for financing facilities for manufacturers and suppliers suffering from the drop in European sales.

The plan is expected to assist Peugeot, which sell diesel hybrids, and second-largest carmaker Renault which is focusing efforts on electric vehicles.

The program will also seek to boost the spread of charging stations for electric cars and hybrids and to promote the vehicle recycling industry. (AFP)