Posted on 11/06/2016 7:52:12 AM PST by Lorianne
For many people, the automotive sector is a determinant of a country’s economic power. If you do not produce car brands that are known worldwide, then you mean nothing. France, once a global leader in car manufacturing, may soon fall out from the elite, as its contribution to the world’s automotive market is dramatically decreasing. It is one of the many signs how weak French economy has become with the euro adoption. A dying industry can be a spark that will set on fire the whole country; or the European Union.
Industry is one of economy’s pillars and it has become clear that we cannot create national welfare without it. It is industry where innovations are developed and real growth is achieved; growth based on real wealth, not financial operations. It has also turned out that a strong manufacturing sector prevents an economy from deeper stagnation, which happened to France.
French industry has been contracting since the adoption of the euro. It was not able to recover after either of the 2001 or 2008 crises because the euro, a currency stronger than the French franc would be, has become a burden to France’s economy. The floating exchange rate works like an indicator of the strength of the economy and like an automatic stabilizer. A weaker currency helps to regain competitiveness during a crisis, while a stronger currency supports consumption of foreign goods.
China has been accused of artificial devaluation of its currency to prop up exports, while the ECB’s policy has had an opposite effect for the economy of France and some South European countries: the euro has become too strong; whereas for Germany’s it has become too weak. That is why the common currency has increased consumption and imports in less productive countries and strengthened German competitiveness and exports. Because of the euro France could not regain international competitiveness in the world’s market after the 2001 crisis, so its industry has been slowly dying ever since.
SNIP
Little rear engine Renaults were once all over Asia...
Bush's Trump's fault!
Renaults, Simcas, Citroens, Peugeots....where are they now?
Excellent analysis of what happens in a currency union when, unlike in the US, there is no corresponding fiscal union to act as an automatic stabilizer for regions hit by adverse shocks.
Hell...
Where the food is British
The Cars are French
The Police are German
The Lovers are Swiss
....and the whole thing is run by Italians.
Somehow I think the world can survive losing French automakers.
I was in France 46 years ago and the cars on the streets of Paris looked like co karts with coragated metal roofs. I would think that if France wanted its own automotive factories that it would invite in Toyota to build a factory for Compact cars. The problem for France is that the economic strength of the country is so weak that very few are able to afford a new car. Certainly not an American or Japanese car.
When was the last time you saw a non-antique Citroen, Renault, or Peugot in the U.S? They are still poular here in Europe, but their reputation for reliability and durability is not good.
"There are a couple of loose ends I'd like to tie up. Nothing important you understand"
I predict this thread will be filled with comments trashing the French auto industry, posted by people who secretly lust for a Bugatti Veyron.
How many cars does Oregon or Virginia manufacture?
Guy I know on the Peugeot assembly line still clocks a lot of high-paying hours. He and his wife come to San Diego every summer.
Rootes Group...
Really? Halved?? The muslims have been burning thousands of them in France. Seems there would be a big need for new cars.
Junkyards, thank God.
France is squeezed by the German boot heel on one side and cheaper Asians on the other. Since the French auto industry is mostly controlled by government, there is no way it can be adaptable enough to survive.
The most popular French-manufactured models are tiny, cookie-cutter designs that the Asians do better and cheaper. There would be a market for upscale and high-end French autos, but no capitalist initiative to make it happen. RIP
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