03 August 2012

The European Car Crisis: PSA/Renault 2012

The three main car producers in France, Peugeot / Citroen (PSA) and Renault are doing it tough. Sales are falling because of too much reliance on Europe which is doing badly. Also, they have been not very aggressive expanding into new niche areas like you would expect French brands to be doing. They once produced fine cars as you see pictured, however now they don't. In a word, they have become complacent. Strong sales in Europe masked all this, but economic changes have brought it to the fore. To see the impact of recent times, let’s look at some data. Sales as listed are for the first six months of 2012 by main markets and West Europe as a whole:

1 Renault 21.2%
2 Peugeot 16.2%
3 Citroen 14.7%

8 Renault 3.4%
12 Peugeot 2.5%
13 Citroen 2.1%

7 Peugeot 5.0%
10 Citroen 3.5%
18 Renault 1.9%

6 Citroen 5.2%
7 Peugeot 4.6%
8 Renault 4.5%

Europe West
4 Renault 6.7%
5 Peugeot 6.5%
6 Citroen 5.7%

Even with over 50% of the French market, PSA and Renault are still doing it tough. PSA have held up reasonably well across Europe, but Renault has really hurt. It was the second most popular brand in Europe a decade ago and less, peaking at 10.7%. Now it is 6.7% and dropping. Around the same time, it was ranked third in Britain, but is now 18th!

The first thing to do now is get costs under control. Renault is pulling away from unprofitable sales, which is the sensible thing to do. This causes sales to fall, leading to the need to reduce production capacity. That is politically unpopular in France as well as with the French people.

Then they need to gradually expand the reach of French automobiles beyond Europe. This is where future growth is. Unfortunately these measures are neither popular nor easy, but what is the alternative? A slow slide to oblivion?

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