The publication of Stellantis financial results with a net profit of 16.8 billion euros must not lead to the conclusion that the car industry has rebounded, has surmounted the past difficulties and will not be confronted in the future with new crisis. Anyway, Renault is far from having accomplished the same achievement because its net profit, before deduction of the two billion euros loss resulting from its exit from Russia, has only reached 1.6 billion. The sector, everywhere in the world, has suffered two successive crisis. The lockdown has dissuaded household from going to buy a vehicle because they couldn’t travel. Car manufacturers were confronted with major supply difficulties and were not always able to satisfy demand.
The situation has been especially worrying in France. New vehicles registrations had reached 2.2 million in 2019. With 1.53 million in 2022, the fall is 30% in three years. Due to de-localizations strategies of the national car manufacturers, production went in France between 2004 and 2022 from 3.7 million private vehicles and light trucks to 1.38 million, i.e. near a division by three in a little less than 20 years. The car industry is for a large share responsible of the aggravation of France trade deficit in industrial goods because its surplus observed in 2004 has been transformed into a 15 billion deficit in 2022.
Renault is the main responsible of that fall. The company has followed a massive de-localization policy which hasn’t brought any profit if we look at the gap between its financial results and Stellantis ones. The Dacia acquisition and the decision to import in France its models have leaded its executives to de-localize in Turkey and in the former Eastern European countries the production of its bottom-of-the-range vehicles like for instance the Renault 5 and after the Clio.
The put forward argument was the excessive labor costs in the Hexagon. It has been taken into consideration by the governments which have made their reduction an essential element of their policies in order to reestablish the country competitiveness and its attractiveness. The foreign exchanges evolution shows to which point that policy has failed. The origin of the problem was not there. It was enough to wonder if in Germany, which was France main competitor in Europe, labor costs were inferior to French ones and constituted the reason of the Mercedes and Volkswagen successes to have the answer and to be convinced that the analysis was wrong.
We would also have to question the Toyota achievements. The Ornaing plant, located near Valenciennes was set up at the end of the Nineties. In 2022, 256 000 cars were produced there. It has become the first car production center in France, before the Peugeot historic site of Sochaux where in 2019 were produced more than 500 000 vehicles. The components supply difficulties of the French carmakers do not explain everything. It is their strategic mistakes, their costly acquisitions, the alliances which did not deliver the expected results and the wrong choices of models which explain that weakening and make very doubtful their ability to take the challenge of the electrification.
Europe has decided that the vehicles with a thermal engine will not be any more offered for sale from 2035. A twelve years period for such a mutation is unprecedented. The Commissioner for the internal market, Thierry Breton, has indicated that in 2026, this objective could be adjusted. We must hope it because it is few likely that the industry, and especially the French car manufacturers, will be able to ensure such a transformation. Consumers, until now, have not shown any enthusiasm to abandon thermal engines because in 2022, they represented 85% of the new vehicles registrations in France. The prices, despite public subventions, of the electric vehicles remain too high and their autonomy doesn’t yet fulfil the client needs.
Consequences for the employees will be heavy. The sector employs in Europe 3.5 million persons. As the car manufacturers think that the making of the new vehicles will need 40% less working time, that means that at least 1.4 million jobs could be suppressed. It is also necessary that the power production follows and that the network is dense enough and equipped with high tension lines to supply the necessary recharging points. Huge investments must so be forecasted. In front of the financial and social consequences of this transformation, the issue of the relevance of the time allowed must be risen if we want to avoid a major industrial crisis.
The will of reinforcing the investments in the railway sector, as it has been announced by the government, is consistent with that policy. Unfortunately, this will doesn’t go until putting into question the liberalization of the bus transportation which pollutes and encourages the travelers to abandon trains along with weighting on the SNCF profitability. That investment program seems too to ignore that a priority would be to reduce the share of the goods transportation by trucks to the profit of trains and to accelerate the building of the Lyon-Turin line to reduce the massive emissions which affect the Alps valleys.
Climate warming results from greenhouse gas emissions which have an effect on the whole planet. The efforts made by a country do not serve to anything if the other countries don’t do the same. And the results of these efforts in favor of the planet are in proportion of its emission level. But Europe has emission levels, as a total or by inhabitants, among the lowest of the developed countries. The issue to rise is so to know if the price to be paid for the transformation of the vehicles is justified regarding the actions of the other States.
About industrial issues, China has a huge advance in the production of electric vehicles. The country has at its disposal indispensable raw materials and has in that domain a dominant position and even sometimes a near monopoly. It will be almost impossible to restrict the access to the European market of the Chinese cars if their car manufacturers decide to interest themselves to it because the risk is real that occur retorsion measures regarding the supply of the indispensable components for the production of the batteries.
The situation is the opposite one with the United States but quite also worrying. The greenhouse gas emission levels are much higher than these observed in Europe because they are the consequence of the consumers choices. These ones prefer heavy vehicles (SUV, vans, pick-up etc…). They represent 75% of the registrations of new vehicles in 2020 against only 25% in 1980. There isn’t any project of forbidding vehicles with thermal engines in the country where their share of the sales is 95%. But, under the Inflation Reduction Act, a program of public subventions for an amount of 369 billion dollars has been put into place to realize investments allowing to reduce the emissions. American car manufacturers, under the condition they make the investments in the American territory, will have access to these subventions, which will strengthen their competitiveness in every domain.
After the sanitary crisis and the consequences on the supply chains of the invasion of Ukraine, the European car industry, and at the first place, the French car manufacturers, are confronted with the obligation to proceed to a full transformation of their activity, with the risk to fall under the domination of their Chinese competitors. During that time, their American competitors, whose vehicles pollute much more, will benefit from massive subventions without being submitted to obligations of the same nature. Time has maybe occurred to ask ourself if all that is reasonable.