Abstract
The French automotive industry has so far maintained its position as the
strongest of its kind, not only in
the Western European market, but almost
the whole of Europe. However, as BMI points out in its latest
France Autos
Report, an expected slowdown in the French economic growth to -1.6%
year-on-year (y-oy)
is likely to slacken vehicle demand and production in
2009.
According to estimates from the French auto manufacturers’
association CCFA, vehicle sales plunged by
a massive 15.8% (y-o-y) to
153,692 units in December, taking the end of year passenger vehicle
registrations to just over 2.05mn, 0.5% lower than the 2007 level. However,
BMI believes the year of end
average figures have been affected by the
extreme differences between the two halves of the year, when
sales surged
by 4.5% y-o-y in the first six months of 2008, followed by a 6.3% y-o-y drop
in H208.
Taking into account the commercial vehicle segments’
registrations, total vehicle sales in France is
estimated to have reached
nearly 2.56mn units, clearly highlighting the accuracy of BMI’s
forecasts of
2.55mn units expected to be sold in 2008.
For 2009, we
forecast car sales to be lower by at least 1.5% by the end of 2009. The
outlook mainly
comes on the back of an increased access to state-backed
loans to nearly EUR6bn pledged by the French
government for Peugeot
Citroën PSA and Renault' s sales and finance divisions in order to help
them
survive the global financial crisis.
However, the government
wants ' exemplary commitments' from the manufacturers in the form of
maintaining domestic production and helping auto parts suppliers in France.
Although official figures for
2008 production have not been revealed as
yet, vehicle production is expected to end lower in the year,
given that
the French automakers had announced plans to minimise their costs by lowering
production
and reducing their workforce in their French facilities. To
that end, BMI forecasts vehicle production to
fall to 2.52mn units by the
end of 2009, down by estimated 2.75mn units produced in 2008.
Nevertheless,
BMI believes manufacturers will be cautious in accepting the
terms of the loan guarantees, and are
unlikely to compromise on their
costcutting targets in return for those loans.
The French market scores
55.1 points in BMI’s Business Environment rating for Europe, lagging
behind
almost all Western European markets. The market mainly loses points
on its country structure although its
automotive market is fairly
well-developed, which in turn poses a tough challenge for new entrants to
the
market – particularly owing to its good reputation in
fuel-efficient technology. Nevertheless, the
government willingness to
support the auto industry implies that France can hope to improve its BMI
ratings score in the long run.
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