France economy: Saving the car sector?- EIU
If the new government's handling of the crisis currently afflicting the car industry serves as a guide to its future conduct of industrial policy, there would be much to fear.
Source : https://www.marocafrik.com/english/France-economy-...
In the wake of a restructuring plan announced by one of France's leading automotive companies, PSA Peugeot Citroën (PSA), ministers resorted to verbally abusing the Peugeot family and PSA's chief executive officer,the Economist Intellegence Unit ( EIU) writes.
The government plan to rescue the car industry amounted to a plan to purchase "green" cars which inspiredlittle confidence. PSA's heavy dependence on saturated european markets for domestic cars in France,Spain and Italy has proved disastrous.In the six months to June 2012, the group's net losses amounted to €819m, compared with net profits of €806m in the same period a year earlier.
PSA has now been forced to make additional cost cutting, up to 1.5 billion by 2015. This entails the net loss of 6,500 jobs in France, including about 3,000 with the closure of the company's plant at Aulnay-sous-Bois.
To put these figures into perspective, PSA has an annual turnover of roughly €60bn and employs more than 180,000 people, the EIU observes.
PSA's announcement of its proposed cuts was not well received by the government and President Hollande in a Bastille Day speech said they were unacceptable.
The minister for recovery Yves Montebourg met with PSA's CEO Phillippe Varin and reinforced this questioning the stance of the Peugeot family which holds a 25 per cent state in the company. The Prime Minister Jean-Marc Ayrault had a more reasonable discussion with Mr Varin and the EIU hopes that this will continue with further negotiations.
The main element of the government plan is the provision of subsidies for sales of cars incorporating advanced environmentally friendly technologies, especially hybrids and electric cars. PSA has concentraed on hybrids. Electric and hybrid cars will receive a government subsidy. There is no mntion of high labour costs which affect all of French industry.
Renault's performance has been relatively better than that of PSA. Despite having the government as a major shareholder (16 per cent), the proportion of its production taking place outside of France, compared with PSA, is significantly greater, in part because of Renault's successful Romanian subsidiary, Dacia.
Both Renault and PSA have specialised in high volume sales of medium priced models for the European market which is now failing because of the eurozone crisis. German manufacturers on the other han have focused on luxury models such as Porsche in high volumes outside the EU notably to China.
The EIU says that it remains to be seen whether Mr Montebourg's approach of complaints against the manufacturer and French government plans for the car industry will have the desired affect.
The government plan to rescue the car industry amounted to a plan to purchase "green" cars which inspiredlittle confidence. PSA's heavy dependence on saturated european markets for domestic cars in France,Spain and Italy has proved disastrous.In the six months to June 2012, the group's net losses amounted to €819m, compared with net profits of €806m in the same period a year earlier.
PSA has now been forced to make additional cost cutting, up to 1.5 billion by 2015. This entails the net loss of 6,500 jobs in France, including about 3,000 with the closure of the company's plant at Aulnay-sous-Bois.
To put these figures into perspective, PSA has an annual turnover of roughly €60bn and employs more than 180,000 people, the EIU observes.
PSA's announcement of its proposed cuts was not well received by the government and President Hollande in a Bastille Day speech said they were unacceptable.
The minister for recovery Yves Montebourg met with PSA's CEO Phillippe Varin and reinforced this questioning the stance of the Peugeot family which holds a 25 per cent state in the company. The Prime Minister Jean-Marc Ayrault had a more reasonable discussion with Mr Varin and the EIU hopes that this will continue with further negotiations.
The main element of the government plan is the provision of subsidies for sales of cars incorporating advanced environmentally friendly technologies, especially hybrids and electric cars. PSA has concentraed on hybrids. Electric and hybrid cars will receive a government subsidy. There is no mntion of high labour costs which affect all of French industry.
Renault's performance has been relatively better than that of PSA. Despite having the government as a major shareholder (16 per cent), the proportion of its production taking place outside of France, compared with PSA, is significantly greater, in part because of Renault's successful Romanian subsidiary, Dacia.
Both Renault and PSA have specialised in high volume sales of medium priced models for the European market which is now failing because of the eurozone crisis. German manufacturers on the other han have focused on luxury models such as Porsche in high volumes outside the EU notably to China.
The EIU says that it remains to be seen whether Mr Montebourg's approach of complaints against the manufacturer and French government plans for the car industry will have the desired affect.
Source : https://www.marocafrik.com/english/France-economy-...