France Autos Report Q3 2009

Publication Date	June 2009
Publisher	Business Monitor
Product Type	Report
Pages	48
ISBN Number	not applicable
Product Code	BMI02626

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Summary

The French automotive industry continues to position itself as one of the strongest markets in the Europe alongside the region's biggest player, Germany. As BMI examines in its Q3 France Autos Report, the market's performance is being underpinned by the government's supportive measures for carmakers and parts suppliers.

Domestically, autos production has gained from the government aid, directly and indirectly. Following the introduction of a scrappage scheme last year, vehicle sales have reportedly stabilised, falling by only 4.8% year-on-year (y-o-y) to 689,931 units in 4M09 and outperforming the Europe-wide average contraction of 15.9%.

The presence of a large number of parts suppliers has helped to make France an integrated base for autos production. However, suppliers and carmakers have been struggling for money due to the ongoing global liquidity crisis and a consequent fall in orders. The government came to the rescue, firstly using EUR18.5mn from its strategic investment fund (FSI) to buy a 2.35 % stake in Valeo, while it has also announced its intention to use some funds from the FSI to invest a nearly EUR10mn in niche car and equipment maker Heuliez. However, the market suffered when German partmaker Continental announced plans to close two high-cost production plants in Europe, one of which is in Clairoix, France, by March 31 2010.

In March, Renault made an attempt to reverse the trend with a shift in the production of its Clio Campus from Slovenia to France. The move follows government aid provided to the carmaker last year. Despite these positive developments, BMI maintains caution, given our expected -2.4% growth in real GDP this year. While we maintain our sales forecast of a 5% y-o-y fall by end-2009, we have revised down our production forecast to a fall of over 12%. The latter is based on increased exports from France to emerging markets which have themselves suffered the effects of the downturn.

Renault and PSA Peugeot Citro?<

Its strong position, relative to the other markets, could help it move up the ladder in the medium term.