Boston, MA -- (SBWIRE) -- 09/04/2012 -- The outlook for the French autos industry has changed for the worse, thanks to a sharp 23.5% year-onyear (y-o-y) decline in new car sales to 197,033 units during Q112 (according to estimates from the country's autos association CCFA). The broader slowdown in the market, coupled with the poor performance of the domestic brands, has prompted BMI to revise down its forecasts for domestic sales and production in the market for 2012.
We are currently forecasting a nearly 8% y-o-y contraction in vehicles sales, to 2.48mn units during 2012, which will be followed by a lacklustre growth averaging 2.5% y-o-y between 2013 and 2016, as consumers will be cautious about making big-ticket purchases. Meanwhile, rising vehicle ownership costs will prove to be a further discouragement for new vehicle purchases. Total vehicle sales growth will therefore reach early 2.74mn units in 2016.
In terms of production, we forecast a 1.5% y-o-y contraction, mainly owing to the domestic demand conditions. Both PSA and Renault have seen their vehicle sales and market shares decline during Q112 and we expect this trend to prompt the carmakers to limit their production. Over the medium to long term, we believe that the pressure to improve finances will push firms to move production to low-cost bases outside their costly home markets. We expect production levels to reach nearly 2.37mn units in 2016, still considerably lower than the pre-crisis levels of over 3mn units produced until 2007.
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Pressure to improve the finances prompted PSA Peugeot Citroen to announce the creation of a global alliance with US-based General Motor Company (GM), in March 2012, to help them save some US$2bn a year within the next five years and make way for the launch of vehicles on a common platform from 2016. BMI, however, remains unimpressed by the agreement as the so-called 'long-term and broad-scale global strategic alliance' has failed to get to the very root of the carmakers' problems in Europe - underutilised capacity and the consequent losses in their European operations.
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