1.1 Definition and scope of study
The car manufacturing market is a market that encompasses a range of activities, namely the design, manufacturing and marketing of passenger vehicles.
Gloablly, the car market is expanding as disposable income rises in high growth countries in Asia. [ibisworld] However, the expansion is haltered by Europe and America where the economy grew at moderate pace only in the beginning of 2020. Going forward, COVID-19 will continue to have a direct impact on the sales of cars. In other words, pre-COVID expansion figures must be considered with care.
In France, the domestic brands continue to hold a strong grip on the total sales of cars. However, domestic players were heavily impacted by COVID-19. On top of this, there is increased pressure from the European Commission on emissions; indeed, the environmental targets set by Brussels for CO2 emissions pose real challenges to car manufacturers on the sales of electric and hybrid vehicles, products that today remain marginal on the automotive market. Le Parisien projects that, if the manufacturers' car catalogue were to remain as it stands, the overall amount of the fine imposed would be €25 billion.
Moreover, the French market is highly concentrated, with two main players. One trend which is emerging is that production is increasingly outsourced to nations outside of France.
1.2 Global production has increased, and is concentrated in Asia and North America
Production (***) of the motor vehicles and parts industry World, ****-****, in USD billion Source: Euromonitor The automotive industry is large and has no singular defintion, hence market sizes and data can vary depending on definitions. One way to classify the car market size is by looking at the production value of ...
1.3 The domestic market's expansion
Production (***) of the motor vehicles and parts market France, ****-****, in € billion Source: ****
Applying the same definition to the market scope as in section *.*, we find that the French automotive market has grown steadily since ****. Indeed, between **** and **** the market grew at a CAGR of *.**%.
However, as we will see in ...
1.4 International Trade
For this section we use UN Comtrade code **** - Motor cars and other vehicles; principally designed for the transport of persons (***), including station wagons and racing cars. In other words, this section includes station wagons and race cars as well, which is more than passenger cars only, and hence figures might ...
2.1 Profile Analysis: The French Consumer
Strong domestic customer base for manufacturers
Car brands ranked by number of owners France, ****, in million units Source: ****
The graph above depicts the registration of cars based on brand. From this we see a clear dominance for local manufacturers in the likes of Renault, Peugeot, and Citroën.
In particular, Renault ...
2.2 The rise in consumer demand for electric and hybrid cars
Sales of car, by energy type France, ****, in % Source: ****
Petrol and diesel cars still dominate the car fleet in France, but hybrids' growth is the strongest. Indeed, between **** and ****, registered hybrid cars grew by **.*%, followed by electric cars (***). Diesel cars contracted by **.*% in this period.
In ****, the share of electric cars ...
2.3 COVID-19's impact on the industry
The global pandemic has proven detrimental for the car manufacturing industry both in France and globally. In particular, this comes from decreased road activity in light of lockdown measures. Due to the continued uncertainty around the virus, the uncertainty remains, and car manufacturers can count on **** being a dark year for ...
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, 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 has ...
3.2 French production outside France has risen
In today's globalised world, the production of cars is rarely made in a single geographical location. Instead, companies use several locations to benefit from access to raw material, labour, and know-hows. For instance, Renault has ** production sites (***) outside of France for a total of ** locations worldwide. [***] World and domestic production of ...
Revenue index for car manufacturing France, ****-**** (***), in units
The line chart above depicts the revenue index in France for the car manufacturing industry. The index is based on the following intuition: the base year is *** in ****. If the index value increases to ***, this implies a revenue increase of *% (***). From this ...
4.1 Passenger cars dominate production
There are three broader types of car types on the market: standard passenger cars (***), hybrids, and electric cars. As we have seen in the previous section the first category dominates.
Fleet Status by Type France, ****-****, in thousands Type of car **** **** **** **** **** **** Passenger cars ** *** ** *** ** *** ** *** ** *** ** *** Light commercial vehicles * *** * *** * *** * *** * *** * *** Heavy vehicles *** *** *** *** *** *** Total ** ...
4.2 Price and cost analysis
Both prices and costs vary greatly depending on the car model. Different cars require different volumes of inputs including raw materials, engineers, and time spent on design and production. Thus, the figures we present below represent a sample proxy, and should not be considered representative for the market as a ...
4.3 Production of clean alternatives backed by the Government
The French Government is a strong catalysator in the goal to transform car use from today's diesel and petrol towards electric and hybrid cars. There is financial incentive both for consumers and producers when looking to purchase and manufacture a car. In particular, on May ** ****, Macron announced that the government would ...
5.1 Regulatory framework
The car manufacturing industry is subject to an extensive legislative framework rooted in the European Commissions rules and regulations. Included in this scope is:
Emissions: since January *st ****, Regulation (***) ****/*** has started applying which covers CO* emission levels for passenger cars with targets for ****, ****, and **** in line with the EU's goals for ...
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