INFOGRAPHICS. From the collapse of car sales to the closure of factories, the mechanics of an automotive sector in crisis

It's a market in decline. The French automobile industry, hit by a series of redundancy plans and factory closures, finds itself "in great danger," warned lobbyist Luc Chatel, spokesperson for French manufacturers, on RMC last January. This message was echoed by the Vice-President of the European Commission, Stéphane Séjourné, who also spoke of a sector "in mortal danger" in early March, when an action plan to support the sector was announced .

To understand the underlying causes of the social crisis affecting this key sector of French industry, franceinfo has reviewed the indicators of the French automobile market. Sales figures, car prices, business failures, financial results... This analysis reveals the paradoxes of a sector that is selling fewer cars while recording record profits.

Analysts attribute this price surge to the arrival of electric and hybrid vehicles on the market, as well as a windfall effect that manufacturers were able to take advantage of after the shortage caused by the Covid-19 crisis. With less supply than demand, major brands found themselves in a position of strength with their customers. Manufacturers then had what Carlos Tavares, the former CEO of the Stellantis group, called "pricing power." They also favored larger vehicles, which were more expensive and more profitable, over smaller cars. This policy enabled manufacturers to achieve record financial results between 2021 and 2023 and to remain highly profitable in 2024.

But in return, buying a new car is becoming increasingly affordable for fewer and fewer people. This phenomenon is particularly visible with major French brands. While sales of Dacia, the Renault group's low-cost brand, have continued to grow in recent years, those of Renault, Citroën, and Peugeot have declined sharply. "High pricing works as long as your models are new. But when your cars are less modern (...) then this strategy no longer works," says Eric Champernaud, CEO of the consulting firm C-Ways, regarding the case of Citroën, whose sales in France were divided by three between 2011 and 2024.

But at the other end of the production chain, this strategy also has serious consequences in factories. In a market that sells fewer cars, manufacturers no longer need to produce as many cars as before. "The shrinking market is leading to a complete readjustment of production capacity," observes Alexia Visca, head of the automotive sector at Secafi, a consultancy firm for business representative bodies. As a result, the sector has been hit since 2023 by a wave of redundancy plans and bankruptcy proceedings brought before the commercial courts.

Most of the redundancy plans and bankruptcy measures implemented since 2023 concern automotive industry subcontractors. "A manufacturer is free to choose its commercial policy. It can lower or increase prices. An equipment manufacturer negotiates a contract over several years at a fixed price. It therefore has a much harder time absorbing shocks," explains Jean-Louis Pech, president of the Federation of Vehicle Equipment Industries (FIEV). This representative of subcontractors points out in particular the consequences of the shift to electric power. "We are experiencing a profound transformation of the sector linked to electrification. However, this is leading to the cessation of certain professions," he explains.

In a note published in October, the Directorate General for Enterprise (DGE) estimated that at least 40,000 jobs would ultimately be threatened by the switch to electric vehicles. "This is an estimate made on the assumption that the sector would switch overnight to all-electric at constant production volume," the DGE stated. "We also emphasize that there will be job creation dynamics linked to the development of new activities around electric vehicles," the Ministry of the Economy's department added. Since 2020, European regulations have required manufacturers to gradually sell increasingly less polluting cars, with the aim of ending combustion-engine vehicles by 2035. But today, the share of 100% electric cars remains very much a minority in new registrations. In 2024, they only accounted for nearly 17% of sales.

In reality, in addition to falling sales, the French automotive industry is currently particularly affected by the gradual disappearance of diesel engines. A phenomenon that dates back to the previous decade and accelerated after 2015, with the revelations about "dieselgate" , the scandal of fraud in car pollution tests. However, the disappearance of diesel engines leads to the cessation of the manufacture of a whole series of parts that are not necessary for gasoline engines.

Among the hardest-hit equipment manufacturers are foundries that produced parts for diesel engines. A gap that is not being filled by the development of hybrid engines. "These cars also have heavy mechanicals that require more work. Unfortunately, Stellantis only offers them on expensive vehicles sold in limited quantities, and Renault manufactures most of its vehicles of this type in Turkey and Spain," explains Bernard Jullien, an economist at Bordeaux Montaigne University and specialist in the automotive market.

Offshoring is the other major explanation for factory closures since 2023. This long-standing phenomenon has accelerated further in recent years. According to figures from the annual reports of the Committee of French Automobile Manufacturers ( CCFA ), the share of Renault and Stellantis cars (excluding the Fiat-Chrysler range) produced in France has fallen again in recent years, falling from 22% in 2019 to 18% in 2023.

Faced with this phenomenon, unions accuse large groups of using electrification as a pretext to continue relocating their activities. "We are also victims of clients like Renault and Stellantis, who are taking advantage of vehicle electrification to stop using subcontracting in France," denounces Denis Bréant, head of the automotive sector at the CGT Métallurgie union.

This union representative is advocating for the construction in France of smaller, and therefore more affordable, electric cars for consumers, similar to the Renault R5 and R4, which are manufactured in northern France. But this hope was partly dashed last summer with the announcement of the return of the Twingo . This new electric version of the famous city car was entirely designed in China and will be manufactured in Slovenia.

Methodology

This article was produced using data provided by AAA Data, a research firm specializing in the analysis and processing of vehicle registration data in France. Sales trends correspond to new registrations of new cars for private individuals (PC) in France. Average car prices were calculated by AAA Data, based on sales volumes, according to catalog prices excluding options, excluding negotiations, and excluding bonuses/penalties.

The manufacturers' financial results are based on an analysis report produced by the consulting firm EY, based on the annual balance sheets of the world's leading brands: BMW, Mercedes-Benz, Volkswagen, Honda, Mazda, Mitsubishi, Nissan, Suzuki, Toyota, Ford, General Motors, Tesla, Stellantis, Renault, Hyundai and Kia.

To identify social plans and collective procedures in the French automobile industry, we relied on union reports, monitoring work using local media and announcements published in the Official Bulletin of Civil and Commercial Announcements (Bodacc).

Written by: Mathieu Lehot-Couette

Design and concept: Léa Girardot

Development: Valentin Pigeau

Proofreading: Boris Jullien

Editorial supervision: Simon Gourmellet, Julie Rasplus