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France Autos Report Q2 2010
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
France |
Published |
11 March 2010 |
Number of Pages |
56 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
There was little in the way preventing French consumers buying new cars during 2009. Despite an estimated 2.2% year-on-year (y-o-y) contraction in the country's real GDP growth rate in 2009, passenger car sales rose a noticeable 10.7% y-o-y, to 2.27mn units, during the year thanks to vehicle scrappage scheme and the country's relatively strong credit markets.
Estimates from the Comité des Constructeurs Français d'Automobiles (CCFA) indicate that the buying frenzy has continued in 2010, although the extended scrappage scheme comes with smaller incentives. January sales increased an impressive 14% y-o-y, to 171,500 units. The scheme will be phased out in three stages and last until the end of 2011 – the year in which we expect more noticeable growth in demand due to the overall economic growth, and an expected rush among buyers to take advantage of the scrappage scheme before it ends to take sales up nearly 2% y-o-y. However, by the end of 2014, sales should reach close to 2.7mn units, only marginally higher than the 2009 level of 2.67mn units. Production, on the other hand, is likely to suffer from its increased exposure to emerging markets, where demand is likely to lag behind that in its domestic markets. As such, we forecast production growth to be limited to a modest 2.8% y-o-y, to 1.45mn units, by the end of 2010. In real terms, this growth will hardly mean any actual increase in production and rather indicate improved capacity utilisation by carmakers. We remain concerned that over time, carmakers will be more inclined to boost production overseas and gradually reduce production domestically, meaning that a full recovery in autos production may be difficult to attain. By the end of 2014, we expect production levels to reach only 1.436mn, still considerably lower than the 2.13mn units produced in 2008.
Nevertheless, the strength of its domestic market and the government’s supportive policies has helped France move up five places, to occupy a third position in our autos rankings for Europe this quarter. Its autos market is fairly well-developed and poses a tough challenge for new entrants, due largely to its reputation for fuel-efficient technology.
The Renault Nissan Alliance looks firm in its global v ehicle electification programe. The Alliance has announced plans of investing a total EUR160mn (US$240mn) at Renault's production facility in the CACIA (Companhia Aveirense de Componentes para a Indústria Automóvel) industrial complex in Aveiro, near Lisbon, to produce its electric vehicle (EV) battery from 2012. Most of Renault’s investments have so far been supported by host governmnets, which confirms our view that electrification of the industry requires coordinated action between companies and governments.
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