In the fast lane

The French auto industry is a key contributor to the economy.

The French have always been in the forefront of the global automotive sector. On home ground, the French auto industry is one of the key contributors to the economy. According to figures published by the Invest in France Agency, the automotive sector generates a turnover of around 92 billion euros, which accounts for about 15 per cent of the country's overall industrial turnover. It employs more than 150,000 people in France.

The figures also state that exports account for about 70 per cent of vehicle production, which explains why French car companies are major players on the international front. The country is also home to around 13 car manufacturers that control 21 assembly plants producing a range of private and commercial vehicles as well as trucks and buses.

The important players that control the sector include the PSA Group and Renault, which account for nearly two thirds of the market. Foreign manufacturers such as Mercedes-Swatch and Toyota also have operations in France.

Important players

The PSA Group is one of the leading car manufacturers in the world. It was formed in 1978 when Peugeot took over Citroen. According to Nazih Massoud, Peugeot Regional General Manager for the GCC, "The PSA Group comprises brands such as Peugeot and Citroen, as well Banque PSA Finance (car finance), FAURECIA (automobile equipment), GEFCO (transportation and logistics), Peugeot Citroen Motors (engines and gearboxes) and Peugeot (motorbikes and scooters."

In 2004, PSA Peugeot Citroen announced a 2.7 per cent increase in sales of passenger cars and light commercial vehicles to 3,375,000 units, which translates to 5.6 per cent of the global market. Rated as Europe's second-largest car manufacturer with a 14.7 per cent share of the market, PSA has also displayed a focused effort towards international expansion by selling around 0.9 million vehicles outside Western Europe during the year.

Peugeot and Citroen, both of which are PSA's brands, have unique identities and are also tough competitors. Both brands operate in more than 150 countries including the Middle East, and sold around 2,027,000 and 1,348,000 vehicles respectively in 2004.

"Peugeot for the first time in its history has crossed the two-million vehicle mark. We sold about 695,000 units outside Western Europe in 2004 and 17,000 units in the Middle East, of which about 25 per cent were sold in the UAE. There are several reasons that have contributed to our success in this region including our network development, an attractive and innovative product plan, which includes an average of about two or three launches a year, successful pan-Arab launches of the 307, 206CC and 407 models and an aggressive pricing policy. Our top selling model in the GCC is the 307, followed by the 206, 407 and 406.

"We are also planning to launch the 407 Coupe and 206 Sedan in the GCC next year," says Massoud.

Citroen, on the other hand, sold 1,096,000 units in Western Europe and 252,100 outside the region. The car company has always been associated with innovative styling and designs, a fact that is apparent in its offerings across each of their segments namely the C1, C2, C3 and C3 Pluriel in the supermini segment, the C4 hatchback and coupe for the mid-range segment, the C5 hatchback and estate for the upper-mid range segment, and the recent C6 executive saloon. The group also has a range of commercial vehicles.

Features such as the hydractive 3 suspension, the sensodrive gearbox, the stop & start system and the Lane Departure Warning System (LDWS) give these cars a definite edge. Environmental protection is also a key concern for the company, as they are dedicated to low-emission, low-consumption vehicles.

The other company that warrants attention is the Renault group, which has an automobile and car financing division. The interesting fact about Renault is that the French government holds a 15.7 per cent share of the company. The group has more than 350 industrial and commercial sites in more than 40 countries, and employs 131,879 people worldwide. In 2004, the group generated revenues of 40.7 billion euros.

Renault has a stake of 44.4 per cent in Japanese automaker Nissan while the Japanese company holds a 15 per cent stake in Renault. This equation is also responsible for the Renault-Nissan alliance, which is considered an impressive success story in auto history.

Renault's alliance with Nissan, now one of the world's top four automobile manufacturers, has contributed to the sale of 5,785,231 vehicles in 2004. The sales of the alliance represent 9.6 per cent of the global market considering that more than 5.7 million of their vehicles on average are sold annually.

The company also acquired controlling stakes in the Romanian car company Dacia in mid-1999 in addition to Korean car manufacturer Samsung. Sales of the company's cars, which include passenger and utility vehicles, amounted to 570 million euros with about 95,296 cars sold in 2004, while Renault-Samsung brought in 947.9 million euros and sold 82,220 vehicles.

Renault also holds a 10.8 per cent market share in Western Europe in the combined passenger car and light commercial vehicle LCV market, and has been rated as the leading passenger car brand with its 10.3 per cent market share.

Like Peugeot and Citroen, Renault is also an important name in the world of motor sports.

In addition to car manufacturers, France has an impressive number of automotive suppliers. In fact, most of the world's major component manufacturers are located here. In terms of companies, US- and German-owned companies form the majority of foreign component companies in the country. Important companies, including Michelin, Delphi, Robert Bosch, Denso Continental AG, Lear, Faurecia, Visteon, Pirelli and Siemens VDO Automotive are all part of the sector.

Automotive suppliers

According to figures published by the Invest in France Agency, the automotive suppliers sector employs around 134,000 people in 590 sites, and has a combined annual turnover more than 20 million euros, which accounts for about 20 per cent of the revenue generated by the automotive industry as a whole. French subsidiaries of foreign groups represent two-thirds of the sector's turnover. Most of the suppliers target the international market as around 42 per cent of the production is exported.

An important reason for the success of the automotive industry in France can be credited to the emphasis on research and development in the sector. Auto companies such as PSA and Renault employ huge resources in enhancing safety standards, fuel efficiency, refining manufacturing processes as well as better quality. PSA is reported to spend 1.39 billion euros on R&D every year, while Renault spends a similar amount.

Leading auto component manufacturers also have research units and technical centres throughout France. Major research programmes are initiated through RNIT (Research and Technological Innovation networks, CNRT (National Centres for Technological Research), PREDIT (National Land Transport and Innovation Programme) and CRITT ( Centres for Research and Technology Transfer).

France also has numerous public and private research laboratories that are dedicated to improving the dynamics of manufacturing, running and maintaining vehicles.