France is the fifth largest automotive market in Europe after Germany, Italy, U.K. and now Russia in terms of vehicle sales with 2,064.999 new light vehicles sold/registered in 2007. In terms of production, France is the second market after Germany with 2,544.699 light vehicles produced in 2007. France is facing difficult times as both new car production and demand have decreased. On the other hand, the average life span of cars is increasing and a higher number of used cars were registered, due to the growing cost of new vehicles in France – average 34,338 dollars (exchange rate $1.60 = 1 Euro).
The market for light vehicle automotive parts breaks out into two major segments: Original Equipment Manufacturers (OEM) and Independent Market (IAM). The primary parts and equipment categories covered in our statistics are power train equipments (thermal engine equipment, transmission systems, exhaust line components, engine components, air supply components and electrical equipment for engines), vehicle interiors (interior modules, cockpit equipment), tire-to-road link components and body components (electrical components and wrings), equipment for measurements, checks, diagnostics and repairs.
The automotive parts market in France is dominated by big multinational firms, many of them American with French or European operations. The French Vehicle Equipment Industries Association (FIEV) federates the main parts and equipment suppliers in France. Large U.S. suppliers are already present in France and are doing well. Of the top twenty suppliers, eight of them are American firms (Delphi, Visteon, Johnson Controls, Lear, TRW Automotive, Dana, Arvin Meritor, Federal Mogul). Generally, there is little to no room for mid-sized exporters in this very closed and competitive environment. However, U.S. automotive equipment manufacturers with high tech products, sophisticated diagnostic tools, and innovative parts otherwise difficult to find in Europe may find a niche.
Price is the main determining factor for French end users, meaning that once an automobile’s manufacturer’s warranty expires, end users then turn to the lower-priced IAM for repairs. Due to new regulations, the IAM will be better placed to respond to end-user demands, as car dealers are now authorized to sub-contract repair activities to independent repair shops without the authorization of car manufacturers.
With an estimated decrease in the size of the light vehicle automotive parts market to $28.27 billion (which represents a drop of 6.2% compared with last year) and a decrease number of 2,064.999 new light vehicles registered in 2007, France is facing difficult time. The two main reasons are the drop in production of passenger cars in France and the increase in automotive equipment production plants supplying parts to the vehicle manufacturers’ new production units located in Central and Eastern Europe. The main categories of automotive parts included in this figure are: power train equipment (39.8%), vehicle interiors (30.6%), tire-to-road link components (13.5%), body components (12.1%) and equipment for measurements, checks, diagnostics and repairs (4%). This equipment is sold to the OEM market (Original Equipment Manufacturers) for both original and aftermarket activities and the IAM market (Independent Market) for aftermarket activities. The number of registered passenger and commercial vehicles on the road in 2007 is around 30 million.
The best prospect sectors for parts and equipment sales in France in are:
• Thermal Engine Equipment
• Transmission systems
• Exhaust line components
• Interior modules
• Tire-to-road link components
• Climate control equipment and measuring and checking instruments for motor vehicles
• Alloy wheels, advanced material body kits and sport utility vehicle (SUV) accessories
• Diesel parts and equipment for diesel engines Of course, the rush for production of “clean vehicles” will create a market for new parts in the coming years.
The light vehicle automotive parts market is constantly changing, so it is difficult to speculate as to how it will develop in the future. This market depends primarily on car sales and has recently been affected by the increasing sales of Asian car brands in France. France, such as Western European markets in general, is a saturated market with no expectation of increase for the next coming years.
Automotive parts suppliers feel pressured by car manufacturers to invest large sums of money in R&D and to open new plants near manufacturers in order to share risk and cooperate in export strategies. Technical improvement is focused on engines and parts as well as HVAC equipment.
As a result of European CO2 regulations, and because 60 percent of registered light vehicles in France are powered by diesel engines, outside competition in the emission technologies segment will increase. There is an ever-growing market opportunity for new replacement diesel parts and diesel diagnostic servicing equipment.
Sales of original equipment (OEM) parts faced an estimated decrease of 6,81%, and represented $23.6 billion. All product categories suffered except air supply components and electrical equipment for engines, controls for transmission systems and exhaust line components.
The market share of aftermarket (IAM) parts sales decreased too by 2,93% and represented $4.6 billion.
Domestic parts suppliers are increasing the share of their sales made outside France; 72 % of total sales are now made outside France, which allow them to balance their losses. Most U.S. industry players are supplying the French market from their European subsidiaries or are pursuing joint ventures.
By Stéphanie Pencolé