The car manufacturing market - France (2024)

1.2 World market: all-time record in 2022

global sales for the ** largest automakers rose by almost **% in ****, reaching an all-time high of €*,*** billion. It's clear from this graph that covid has come to a screeching halt in the industry. However, the sector's economic recovery has been very strong. The market has expanded, with average annual growth of *.*% between **** and ****.

Worldwide sales of the ** largest automakers Worldwide, ****-**** Source: ****

The global automotive industry is largely dominated by German and Japanese manufacturers, who together account for almost **% of the market, followed by the Americans with **% of sales and the remaining European manufacturers with **% of sales by value.

Global automotive industry market share by value World, ****, % of total Source: ****

The graph below shows that global car production has increased since ****. In that year, ** million cars were produced and sold; in ****, this number increased by ** million to reach a total production volume of ** million cars, which is the all-time record in volume terms. The covid crisis and the closure of China have led to a sharp drop in car production and sales. By ****, global car production is expected to reach ** million units. price rises linked to inflation and technological advances have encouraged growth in the automotive sector, although production levels prior to ...

1.3 Domestic market expansion

Sales in the motor vehicle construction sector rose by **.*% in ****. In ****, the sector's sales increased by almost **%, then gradually recovered in **** and ****.

it should be noted that nearly **% of the sector's sales in **** will come from exports

Sales - Domestic and export - Motor vehicle manufacturing (***) France, ****-****, € billion Source: ****

However, as we shall see in the graph below, production volume has fallen. This implies that foreign cars have become more common in France, but could also be explained by premiumization. In other words, the French are buying more top-of-the-range cars (***), which increases market revenues.

Automobile production volume in France France, ****-****, in millions of units Source: KNOEMA In ****, *.*** million cars were produced in France, representing an increase of *.*% on ****. This is still a long way from pre-crisis covid levels, with a **% drop on pre-crisis levels. France accounts for just *.*% of global automotive volumes and *.*% of European automotive production. Since ****, car production in France has fallen steadily, and since ****, it has fallen sharply. This is due to the fact that more of France's production takes place abroad, as we'll see in greater detail in section *.*.

1.4 Foreign trade: Record trade deficit

Between **** and ****, the value of imports rose by an average of *.*% per year, while exports grew by an average of just *.*%.

By ****, exports have risen by almost **%, driven by excellent results from the Stellantis Group.

foreign trade in automotive products (***) France, ****, Millions of euros Source: ****

france's foreign trade deficit in the automotive manufacturing sector deteriorated significantly between **** and ****, reaching **.* billion euros in ****.

The structural plunge in automotive foreign trade is explained by an equally structural decline in French automotive production [***].

For every six cars sold, France now buys ten. This trend reflects a striking reality: a considerable drop in production, with a third of it having disappeared in just three years. Factories have lost momentum, especially the two models that were favorites with customers and in the national rankings: Renault's Clio and Stellantis' ***. These two French giants made a major decision in ****: to relocate their production out of France, directing it to destinations such as Spain, Turkey and Slovenia. As a result, production volumes in France have plummeted, as have exports. with the exception of Toyota's Yaris, France is now limited to manufacturing SUVs and more expensive sedans, which sell less well and export less.

Trade balance France, ****-****, Millions of ...

2.1 Profile analysis: The French consumer

A strong national customer base for manufacturers

Car brands ranked by number of owners France, ****, in million units Source: ****

The graph above illustrates car registrations by brand. It shows the clear dominance of local manufacturers such as Renault, Peugeot and Citroën.

In particular, Renault was the most widespread brand in France in ****, with **.** million vehicles registered. Peugeot was second with almost **.** million cars, and Citroën accounted for *.** million. Together, these three brands account for over **% of the thirteen most owned brands, confirming their dominance. So it seems that the most promising market for French carmakers is the domestic one.

Top ** best-selling passenger cars, by model France, January ****-June ****, as % of sales Source: CCFA The chart above confirms once again the popularity of French car brands in France. The first nine months of **** showed a clear dominance by Peugeot and Renault, with the Renault Clio V and Peugeot *** being the two best-selling cars in France.

The foreign models shown above (***) held only marginal market shares. It's interesting to note the breakthrough of the Tesla Model Y in the Top ** cars sold in France in ****, demonstrating the automaker's strategy of making these cars much more accessible.

2.2 Growing consumer demand for electric and hybrid cars

Registered vehicles, by energy type France, ****, in Source: CCFA In France, gasoline- and diesel-powered vehicles continue to dominate the automotive landscape, however, hybrid vehicles are recording particularly remarkable growth. Between **** and ****, the share of new hybrid car registrations rose from *.*% to **%, and this upward trend looks set to continue in **** and ****. Electric vehicles follow closely behind, with market share rising from *.*% to *.*%. At the same time, new regulations concerning diesel and petrol vehicles have led to a decline in the share of new diesel car registrations, from **.*% in **** to **.*% in ****, while petrol cars have fallen from **.*% to **.*%.

This growth is accompanied by growing environmental concern about the negative externalities of traditional diesel and petrol cars. on a global scale, this shift towards electric cars as part of a green transformation can be seen in the fact that Tesla is now the world's most popular car company]. [***]

Number of electric vehicles sold France, ****-*****, in units Source: automobile-propre The graph above confirms the explosion in sales of electric and hybrid cars; in ****,**,*** cars were sold. By ****, this number had risen to ***,***, representing a CAGR of **% between **** and ****

Indeed, the fact that the use of hybrid and electric cars is increasing rapidly is ...

2.3 The impact of COVID-19 on the industry

The global pandemic has had a detrimental effect on the automotive industry, both in France and worldwide. This is due in particular to the reduction in road traffic as a result of containment measures. Because the evolution of the virus and the situation is unpredictable, uncertainty remains, and automakers can count on the fact that **** will be a black year for business.

Indeed, many figures point in this direction. For example, CCFA reports that car registrations between January and June **** fell by **.*% in France. In April, Usinenouvelle reported that March saw a **.*% drop in sales of new passenger cars and light commercial vehicles.

Renault and PSA share price trends during the Covid-** epidemic France, ****, in € per share Source: ****

In France, national carmakers have not escaped the force of the pandemic; the graph above represents the share price of Renault and PSA, France's two biggest carmakers, between January and July ****. In March, there was a clear drop compared with January, of around **% for Renault and **% for PSA Peugeot. However, alongside a strong recovery in stock markets in general, PSA recovered a significant portion of its share price in July ****, while the recovery is slower for Renault.

AA reports that car sales by ...

3.1 Market structure

The market structure in France is highly concentrated and takes the form of a duopoly. Two groups dominate car manufacturing and sales, as listed below

Renault Renault is owned by the French government and includes other car brands such as Dacia ; Renault has partnerships with Nissan and Mitsubishi. The French group owns **.*% of Nissan, giving it effective control of the company. PSA-Peugeot The company comprises the Peugeot, Citroën, DS, Opel and Vauxhall brands

In addition, Renault Trucks, owned by Swedish company Volvo AB, is usually included. However, trucks are not included in the scope of this study

In January ****, the Stellantis Group was born from the merger of PSA-Peugeot and FCA, the group becoming the world's *ᵉ in terms of volume of cars sold and *ᵉ in sales

In terms of volume of new passenger cars registered between January and August ****, Stellantis and Renault hold almost **% of market share in France.

Market share by volume of new passenger car registrations France, **** (***) Source: ****

3.2 French production outside France increased

In today's globalized world, car production rarely takes place in a single geographical location. Instead, companies use multiple sites to benefit from access to raw materials, labor and know-how. For example, of the ** production and assembly sites worldwide used by Renault, Stellantis (***) and Renault Trucks, including * in projects, only ** are located in France.

Passenger car manufacturing in France has grown in importance in a global context, as the graph above shows. In other words, production has been increasingly outsourced to countries outside France. In ****, *.** million cars were produced abroad, and by ****, this number had almost doubled to *,***. By ****, the number of cars delivered outside France has reached *.* million. Meanwhile, domestic vehicle production has been steadily declining, as competition from foreign players has intensified.

Domestic and global production of passenger cars by French groups World, ****-****, in thousands of units Source: ****

Car manufacturing in France is carried out in a cluster in Northern and Central France. This cluster of production sites centered on northern France is not arbitrary Franceinvestindicates that the region is optimal because it is strategically located, with almost two-thirds of European carmakers within *** km of the production site. In addition, the population is young, there are many students, and ...

3.3 Distribution

as of January *, ****, the main network, made up of branches, manufacturers and dealers, represents *,*** outlets, out of a total of **,*** outlets in France.

Sales networks in France for light vehicles at January *, **** France, ****, Units Source: ****

in order to maintain a high level of quality in sales and after-sales services, the distribution networks of the automotive brands rely on the selection of distributors and repairers who can meet the standards and expectations of these brands, as well as provide excellent customer service. Collaboration between automakers, their distributors and authorized repairers guarantees not only maintenance and repair, but also warranty coverage, user safety, environmental protection, availability of spare parts, and information on technological advances.

4.1 Passenger cars dominate production

The big picture

There are three main types of car on the market: standard passenger cars (***), hybrid cars and electric cars. As we saw in the previous section, the first category dominates.

Traffic

Fleet status by type France, ****-****, in thousands Type of car **** **** **** **** **** **** **** **** **** **** Passenger cars ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** Light commercial vehicles * *** * *** * *** * *** * *** * *** * *** * *** * *** * *** Heavy-duty vehicles *** *** *** *** *** *** *** *** *** *** Total ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** ** *** Source: SDES The above table confirms that private cars are the most common means of transport on the road. We can also see that between **** and ***, the number of cars on the road increased, which should indirectly benefit the automotive industry since sales are relatively correlated to these figures.

4.2 Price and cost analysis

Prices and costs vary considerably depending on the car model. Different cars require different volumes of input, including raw materials, engineers and time spent on design and production. The figures we present below are therefore a representative sample, and should not be taken as representative of the market as a whole.

For the prices below, we present a range for French carmakers (***) from the cheapest to the most expensive model, for both standard and clean cars.

Source: ****

4.3 Clean alternatives supported by the government

The French government is a powerful catalyst in the process of gradually switching from today's diesel and petrol cars to electric and hybrid cars. There are financial incentives for both consumers and producers looking to buy or manufacture a car. In particular, on May **, ****, Mr. Macron announced that the government would offer consumers and businesses financial incentives of up to €*,*** and €*,*** respectively for the purchase of these cars. [***]

In the same vein, Mr. Macron stated that France aims to produce one million clean cars (***) by ****, making it the European leader in such production. In ****, France produced ***,*** clean cars, the highest number in Europe. However, forecasts for **** indicate that France will be overtaken by Germany's production. [***]

For automakers, this will mean changing the current status quo. For example, factories will have to adapt to new manufacturing techniques and new inputs such as raw materials. From a regulatory point of view, the manufacturing process will also change.

Despite record sales of electric and hybrid cars, this doesn't seem to be translating into the hearts of the French. The graph below illustrates the reasons for French consumers' reluctance to buy clean vehicles, and thus highlights the factors that manufacturers should take into account to ...

5.1 Regulatory framework

The automotive industry is subject to an extensive legislative framework based on rules and regulations issued by the European Commission. This scope includes

emissions: Since January *, ****, Regulation (***) ****/*** has been in force, settingCO* emissions performance requirements for ****, **** and ****, in line with the EU's Paris Agreement targets

-after lengthy negotiations with its member countries, the European Union (***) has approved a ban on the sale of new internal combustion engine cars in ****

Competitiveness: Regulation ***/**** grants the automotive sector a specific block exemption for vertical agreements for the purchase, sale or resale of new motor vehicles and vertical agreements for the provision of repair and maintenance services for such vehicles and the distribution of spare parts. Motorvehicle surveillance: Regulation ****/*** concerns the administrative requirements for the market surveillance and approval of motor vehicles and their trailers, as well as systems, components and separate technical units intended for such vehicles.

An overview of all EU regulations can be found here.

6.1 Segmentation

Here's a breakdown of the world's automotive groups:

• Ligier Groupe
• Ineos Grenadier
• OPmobility Plastic Omnium Groupe
• Stellantis (Groupe PSA et Fiat)
• PSA Peugeot Citroen
• Renault Groupe