/u/despurrado is right. It was picked because the abundance of Hotels and amenities. But those hotels did not house "Nazi departments" as Petain's government is the official French government at the time and was independent, albeit doing most of the Nazi's bidding (such as signing off on deportation orders to concentration and labor camps). Vichy was occupied by Germany from 1942 to 1944 when they invaded the Free Zone. But saying Vichy=Nazi Germany is a dangerous and dishonest shortcut, and I don't want anyone to overlook the active collaborationist policies that Vichy entertained with Germany.

First Bordeaux became the capital, but after the 29th of June 1940, Bordeaux was in Occupied Territory.

It then moved to Clermont-Ferrand for a short while but the new government found the city to be "too popular" and lacking "proper amenities.

Why Vichy when you could go to Lyon, or Marseille for that matter?

In short, the army was stationed in Clermont-Ferrand still, which is close to Vichy. Marseille was considered unsafe. Lyon overall would have been a good pick but the government was afraid of popular unrest.

Source : Michele Cointet, Vichy Capitale : 1940-1944

/u/despurrado is right. It was picked because the abundance of Hotels and amenities. But those hotels did not house "Nazi departments" as Petain's government is the official French government at the time and was independent, albeit doing most of the Nazi's bidding (such as signing off on deportation orders to concentration and labor camps). Vichy was occupied by Germany from 1942 to 1944 when they invaded the Free Zone. But saying Vichy=Nazi Germany is a dangerous and dishonest shortcut, and I don't want anyone to overlook the active collaborationist policies that Vichy entertained with Germany.

First Bordeaux became the capital, but after the 29th of June 1940, Bordeaux was in Occupied Territory.

It then moved to Clermont-Ferrand for a short while but the new government found the city to be "too popular" and lacking "proper amenities.

Why Vichy when you could go to Lyon, or Marseille for that matter?

In short, the army was stationed in Clermont-Ferrand still, which is close to Vichy. Marseille was considered unsafe. Lyon overall would have been a good pick but the government was afraid of popular unrest.

Source : Michele Cointet, Vichy Capitale : 1940-1944