The French automotive sector is facing significant pressure from stringent EU environmental regulations, ambitious energy transition targets, declining competitiveness, and the US imposition of a 25% tariff on car imports.
These factors are prompting car manufacturers to explore the option of sourcing more affordable components from outside the EU, threatening domestic manufacturing.
French passenger car and light commercial vehicles (LCV) combined production decreased by 10% last year compared to 2023, says French carmakers’ association Organisation Internationale Des Constructeurs Automobiles (OICA).
The country’s automakers produced 910,243 passenger cars in 2024, reflecting a decrease of 11%. LCV output in 2024 declined 7% to 447, 458 units. Overall production stood at 1,357,701 vehicles, down from 1,505,079 in 2023.
According to local automotive component makers association FIEV, the situation in Europe and France is concerning. National production falling to 1.3 million vehicles in 2024 reflects a collapse of 63% since 2002 and 38% since 2020, FIEV president Jean-Louis Pech warned during a senate hearing last week.
More than 70% of FIEV members believe their production in France and Europe is in danger. 55% have already recognised the possibility that French and European automakers may start sourcing components from lower-cost competitors outside of Europe, according to a survey conducted in March.
In 2024, employment in the car component manufacturing sector in France decreased to approximately 56,000 jobs, reflecting a 17% decline relative to 2019 levels.
Since January 2024, approximately 7,300 jobs have been eliminated or are at risk due to restructuring initiatives or site closures. At the European level, 42% of suppliers anticipate operating at a loss in 2025, FIEV says in a document obtained by Kallanish.
The period of high inflation from 2022 to 2024 significantly widened the competitive disparity between European and Asian suppliers. Besides the US 25% car import duty, European equipment manufacturers are suffering from a general decline in vehicle production and slow offtake of electric vehicles in Europe.
The association is calling for the implementation of a baseline requirement of 75-80% of “made in Europe” content in vehicles. It is also seeking solid European measures to enhance the competitiveness of the automotive sector, especially amid the shift towards electric vehicles.
This can be achieved by executing a European investment strategy modelled after the American IRA. This includes measures such as lowering energy costs, decreasing mandatory salary deductions and production taxes in France, and simplifying access to financing, particularly for small and medium-sized enterprises.
