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France Autos Report Q4 2011
Business Monitor International, Oct 2011, Pages: 74
BMI's long-held forecast of a 7% y-o-y drop in new car sales in France in 2011 is beginning to play out as monthly car sales growth continue to weaken. Estimates from the European autos association ACEA show that new passenger car sales in France fell 12.6 y-o-y, to 210,170 units, in June 2011, marking a reversal from the 8.9% y-o-y rise in Q111. That takes the year-to-date sales up a marginal 1% compared with H111.
We expect softer expansion heading into 2012, in line with our core view that we have probably seen the peak in French growth. As such, in line with our expectations of a modest 1.7% y-o-y real GDP growth in 2012 - compared with the 2.2% growth we expect in 2011 - we expect vehicle sales growth to slow to just over 2% next year.
Having said that, we expect conditions to be tight for both carmakers, both in terms of demand and production. Both PSA Peugeot Citroën and Renault are likely to suffer from their excessive reliance on the European market, which we expect to be a significant underperformer in the global autos market. A further downside risk to Renault's growth lies in the fact that the French government has often used its 15% ownership in Renault to influence management and strategy changes at the carmaker.
Despite this, France continues to rank in the coveted top five position of BMI's Risk-Reward Ratings for the autos industry in India. Much of this comes on the back of the size of its domestic autos market and size of autos production in the industry. We, however, see downside risks to its score in the longer term as high production costs locally will put pressure on carmakers to move production away from the country. We are currently expecting 2015 production to reach 2.41mn units, down from over 3mn units produced prior to the crisis in 2007.
Opportunity for carmakers in France, however, lies in the potential for alternative fuel vehicles, as the government seeks to boost public confidence in these vehicles through subsidies and investments in supporting infrastructure. French carmakers and suppliers are also increasingly looking to increase their exposure to emerging markets, which could help them offset some of the losses made in Europe.
BMI's long-held forecast of a 7% y-o-y drop in new car sales in France in 2011 is beginning to play out as monthly car sales growth continue to weaken. Estimates from the European autos association ACEA show that new passenger car sales in France fell 12.6 y-o-y, to 210,170 units, in June 2011, marking a reversal from the 8.9% y-o-y rise in Q111. That takes the year-to-date sales up a marginal 1% compared with H111.
We expect softer expansion heading into 2012, in line with our core view that we have probably seen the peak in French growth. As such, in line with our expectations of a modest 1.7% y-o-y real GDP growth in 2012 - compared with the 2.2% growth we expect in 2011 - we expect vehicle sales growth to slow to just over 2% next year.
Having said that, we expect conditions to be tight for both carmakers, both in terms of demand and production. Both PSA Peugeot Citroën and Renault are likely to suffer from their excessive reliance on the European market, which we expect to be a significant underperformer in the global autos market. A further downside risk to Renault's growth lies in the fact that the French government has often used its 15% ownership in Renault to influence management and strategy changes at the carmaker.
Despite this, France continues to rank in the coveted top five position of BMI's Risk-Reward Ratings for the autos industry in India. Much of this comes on the back of the size of its domestic autos market and size of autos production in the industry. We, however, see downside risks to its score in the longer term as high production costs locally will put pressure on carmakers to move production away from the country. We are currently expecting 2015 production to reach 2.41mn units, down from over 3mn units produced prior to the crisis in 2007.
Opportunity for carmakers in France, however, lies in the potential for alternative fuel vehicles, as the government seeks to boost public confidence in these vehicles through subsidies and investments in supporting infrastructure. French carmakers and suppliers are also increasingly looking to increase their exposure to emerging markets, which could help them offset some of the losses made in Europe.
Business Monitor International's France Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on France's automotive industry.
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