PRLog (Press Release) – Apr 02, 2011 – Despite the resilience of its domestic consumers - relative to the broader eurozone, French carmakers are counting on emerging markets to help strengthen their weak finances. While PSA Peugeot Citroen chases a target of making emerging markets (EMs) account for nearly 50% of its total sales, its compatriot Renault is hoping to increase sales 15% between 2011 and 2013, mostly on the back of key emerging markets such as Brazil and Russia.
What prompts these carmakers to look for outward-looking strategies is the relative stagnation in French auto demand. BMI expects vehicle sales to grow an average of just over 2% y-o-y between 2011 and 2015. This should take the country's end-2015 sales to just under 3mn units, although the market will fully recovery to pre-crisis level of over 2.72mn units a year by as early as 2012.
Despite sluggish growth domestically, it is unlikely that that French carmakers will shift much of their production overseas. Commitments given to the French government to retain production in the country - in return for timely aid during the global financial crisis, is likely to put automobile news brakes on company's plans to move production abroad. As such, BMI expects French auto production to maintain a steady growth rate of 1.7% y-o-y between 2012 and 2015, following a robust 15.8% y-o-y rise expected this year. The downside risk to this forecast however is the fact that carmakers will be more inclined to boost production overseas and gradually reduce production domestically once the state aid is repaid.
Temporary optimism to the country's automotive manufacturing has come from Japanese motorcycle manufacturer Yamaha's plans to close its factory in Barcelona and consolidate much of its android application European production at its Saint-Quentin plant in northern France. The motorcycle manufacturer is one of the major players in European new bike segment alongside Italy's Piaggio and compatriot Honda Motor.
Meanwhile, French suppliers are following trends set by original equipments manufacturers (OEMs) and are aggressively looking to increase their emerging market presence. Tyre maker Michelin is looking to double production at its plant in Davydovo, south of Moscow, by 2012 and plans to build a second plant in the country in the longer term. Meanwhile, Faurecia will form joint ventures (JVs) with Chinese carmaker Geely Group and auto parts supplier Zhejiang Limin to construct facilities at Geely's industrial parks in five Chinese provinces. The facilities will design, develop, produce and supply interior systems and exterior components to the entire range of Geely brands in the country.
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