The car manufacturing market - France

France's car manufacturing market has been hit hard by the COVID-19 crisis, with a dramatic 38.6% drop in car registrations in the first half of 2020, and leading companies such as Renault and PSA seeing their share prices fall significantly. Despite difficulties, including production and supply chain issues, in 2022 the sector grew by 13.4%, still below pre15.7 billion, as imports, notably from China, tripled.

The market has notably shifted towards electric and hybrid vehicles, with nearly 40% of registrations by 2022 and government incentives of up to 7,000 euros for consumers. However, skepticism remains, with only 26% of French people planning to buy electric vehicles in 2023, citing high costs. Worldwide sales of the 16 largest automakers reached a record €1,868 billion in 2022, but the French automotive industry is increasingly outsourcing production abroad.

Consumer demand trends and dynamics

The French automotive market, a dynamic sector focused on the design, production and sale of passenger vehicles, reveals compelling trends revolving around consumer demand, changing market structures and government influences. Despite the strong presence of national brands in car sales, the industry was confronted with the challenges posed by the Covid-19 pandemic and the strict rethis led to a significant, albeit recovering, drop in production volumes.

With environmental considerations gaining ground, electric and hybrid vehicles have surged ahead, accounting for almost 40% of registrations by 2022. Consumer reluctance towards electric vehicles, mainly due to high purchase costs, is a further obstacle for manufacturers.

Against a backdrop of economic recovery, the French automotive manufacturing sector finds itself at a crossroads. Export sales will account for a substantial share - almost 60% - of the sector's sales in 2022, even though production volumes have not yet fully returned to pre-crisis levels. This trend is underlined by the tendency for production to be outsourced beyond France's borders, leading to a decline in domestic manufacturing as imports, particularly from countries such as China, intensify.

In addition, demand for electric and hybrid cars has taken off, as evidenced by a compound annual growth rate (CAGR) of around 55%. Government incentives and legislative measures, including subsidies and future bans on combustion engines, are actively steering manufacturers and consumers towards cleaner automotive technologies.

The market structure, characterized by a duopoly with Renault and Stellantis at the helm, features high market concentration, with almost 55% market share in new passenger car registrations in August 2023. Changing consumer preferences towards environmentally-friendly vehicles continue to redefine the automotive landscape, despite the general preference for traditional passenger cars on the market.preference for traditional passenger cars on French roads, indicating a gradual but marked shift towards greener alternatives in the sector.

The balance of trade reflects a growing deficit, reaching between 15 and 17 billion euros by 2022 - the gap being mainly fuelled by a structural decline in domestic production alongside a peak in foreign production. The relocation of production units for the main French models to countries with competitive labor costs is a factor contributing to the rise of the automotive industry. The automotive market in France and around the world is a constantly evolving landscape.

The main players in the French automotive market

In this dynamic arena, several key players are emerging, each with a significant influence on market trends and consumer choices. Despite the multitude of brands and companies, the structure of the French market is particularly notable for its concentration around two industry titans.

• The Renault Group, with its alliances with Nissan and Mitsubishi, ensures a significant presence not only in the French domestic market, but also on a global scale. The French government's stake in Renault reinforces the brand's status as a national heavyweight, while Dacia operates under its wing, extending its reach to diverse consumer segments.
  
  
• Stellantis embodies a transnational force, born of the merger of PSA-Peugeot and FCA. Integrating brands such as Peugeot, Citroën, DS, Opel and Vauxhall, Stellantis has risen to the forefront, ranking fourth worldwide in terms of volume of cars sold and third in terms of sales. The group's strategic alliances and diverse brand portfolio make it a formidable competitor, challenging the established order both at home and abroad.
  
  
• The French automotive sector also includes Renault Trucks, whose offering in the commercial vehicle segment is well known, even if it does not fall within the scope of this particular review. It is important to note that Renault Trucks is managed by Sweden's Volvo AB, indicating a blurring of national boundaries in the world of car manufacturing.
  
  
• In a broader global context, Volkswagen, Toyota and General Motors are colossal mainstays, each with a rich heritage and influential role in shaping international automotive history. These global giants dominate significant market shares and drive innovation, further intensifying the competition that inherently benefits consumers through a variety of choices and advancements. With growing ecological awareness and technological advances, the French market has seen an unprecedented boom in clean-energy vehicles.
  
  
• Tesla made a remarkable entry with its Model Y, signaling not only an entry into the top 10 best-selling vehicles in France, but also underlining the growing inclination for electric mobility solutions.

The industrial landscape bears witness to the resilience and adaptability of automakers. French players continue to exert a formidable force at national level, while remaining agile in the face of the changes and trends dictating global markets.

Inforamtion

• Number of pages : 30 pages
• Format : Digital and PDF versions
• Last update : 18/10/2023

Summary and extracts

List of charts

• OBSERVATOIRE DES MOBILITÉS PARTAGÉES ET ÉLECTRIQUES (Ifop)
• The French were increasingly skeptical about electric cars
• Renault and PSA share price performance during the Covid-19 epidemic
• Domestic and global production of passenger cars by French groups
• Number of employees in the automobile manufacturing sector
• Sales networks in France for light vehicles at January 1, 2022
• World automobile production
• Global automotive industry market share by value
• Worldwide sales of the 16 largest automakers
• Sales - Domestic and export - Motor vehicle manufacturing (29.10z)
• Automobile production volume in France
• Car brands by number of owners
• Top 10 best-selling passenger cars, by model
• Market share in volume of new passenger car registrations
• New passenger car registrations by energy type
• Number of electric and hybrid vehicles sold
• Top-selling hybrid vehicles, by model
• Top-selling electric vehicles, by model
• Foreign trade in automotive products (C29A)
• Balance of trade
• Positive contribution to imports