The resurrection of the French car

The French are not the most optimistic people anyway, according to all polls. But if the national industrial rock is at stake, then the mood will change quickly. When the automaker PSA (Peugeot, Citroën) suffered a loss of 5 billion euros in early 2013 and the competitor Renault recorded a decline in sales of no less than 22%, French analysts have prophesied the # The inevitability of France. "Even the French do not see their own cars anymore", also titled NRC Handelsblad .

This can be done. Five years after the disaster scenarios, PSA and Renault break one record after the other. Operating profit margins (7.8% for PSA, 6.4% for Renault) are higher than ever and are at the level of premium brands (German). The French still mainly manufacture cars for the mass market. But never before have they sold so much, it turned out last month semiannual figures. Renault sold 2.1 million cars (with its subsidiaries Dacia, Lada and Samsung), PSA with just over 2.2 million cars

PSA in volume Renault outperformed, was mainly due to the l '; acquisition, last year, of the German Opel. Under the umbrella of US owner General Motors, this brand has been losing steam since 1999, and Opel has made a profit of 502 million euros in the first six months of 2018. Without Opel, the margin PSA would even be 8.5% in the first half. "These are all margins that other companies are jealous," said analyst Georges Dieng of the Franco-German financial group Oddo BHF, which tracks PSA developments for years. And this, according to him, is "spectacular for a company that depends so much on the European market"

See also: Presidential in a middle class

Too European

Because that was then, when it was like that went wrong, the usual analysis: PSA, which also struggled with overcapacity, especially in its French factories, remained too European for years. Renault could suffer from the bad economic situation, but would be better prepared for the future in the long run thanks to the alliance with Nissan and the presence on all continents. Renault-Nissan-Mitsubishi is today the largest car manufacturer in the world: in the first half, 5.54 million cars were sold, just more than at Volkswagen. PSA has become dependent on the European market only with the purchase of Opel with 76.6% of sales.

But is it bad? Due to the restructuring done by the Portuguese President and CEO, Carlos Tavares, in recent years to "mark with the lion", more strength in Europe can contribute better to the rest of the world, think analysts. "The European market has proven to be a strength, and they have turned PSA into an asset," says Dieng. Opel was a great opportunity in this regard, he thinks. "Although PSA has become more European, only if you are healthy in your home market, you can conquer the world."

The condition is that the European economy continues to operate for a while, warns Franck Lévêque, partner at consulting firm Frost & Sullivan. Numerous investments elsewhere in the world, such as the revitalization of the classic Indian brand Ambassador, acquired last year by PSA, will only lead to results from around 2020 or so. But PSA Europe director Maxime Picat remains optimistic. He sees "in the current geopolitical context" another advantage, he said during the presentation of the figures last week: "We are unfortunately not yet globalized, but we are also less sensitive to all tariffs that are erected here and there "

But that was before the start of a trade agreement between the US and the EU. The lowering of taxes on importation is a "dangerous idea," said director Luc Chatel of the French group PFA automotive lobbying against Bloomberg.He talked about "unfair competition" because, according to the principle of "the most favored nation" of the WTO All other countries should also receive benefits, so: The Asian countries, which like the French, manufacture cars for the mass market, could claim lower rates in Europe so important for PSA. the great concerns of the government as to any agreements with Donald Trump.

With the beginning of a trade agreement, a trade war between the United States and the EU was provisionally averted. Read also the analysis: The case of Trump and Juncker is fragile and hollow

Timing perfect

Tavares came to PSA in a quirky bed, says Lévêque: his predecessor Philippe Varin, which saved the company from falling, brought new capital with a new ownership structure in which the Chinese Dongfeng and the French state each took an interest of 14 percent (now 12.9 percent). He had also made the painful decision to close the large PSA plant at Aulnay-sous-Bois, near Paris. At the same time, new jobs are being created, also in France, to meet the strong demand of the lucrative Peugeot 3008, suv. "The moment was perfect for Tavares: there was fresh money that could be invested and restructured, and with the recovery of the European market he was very lucky."

PSA also became a "better" company, "he says. "There have always been good and smart people, but if you no longer have the ability to invest, they become frustrated.Now, it's exactly the opposite.SPA has become an innovative company open to new ideas. "