French Auto Makers Push New Strategies, Despite Roadblocks

PARIS – A move by the French government to strategically support the revival of the local auto industry raises a red flag in Europe, and the European Commission is launching an inquest.

France, which owns about 15% of Renault, decided to step in after a government study last year concluded PSA Peugeot Citroen had to close its Paris-area plant in Aulnay to survive.

The government helped PSA’s bank with a loan guarantee to keep the auto maker’s other factories open and bring the company back to prosperity. PSA is close to winning its legal battle with its unions to close Aulnay and now is turning its attention to Brussels.

The auto maker is trying to persuade the EC that it did not received non-competitive help from the government in the form of a €7 billion ($9.1 billion) loan guarantee.

The Commission’s inquest is not unexpected. In February when it approved the French loan to PSA and other temporary help, it said it would be examining the auto maker’s restructuring program to see whether it was compatible with European Union rules limiting how much governments can help business.

The news is not all bad for PSA. The business newspaper Les Echos reports the auto maker is negotiating with General Motors to produce a commercial van together in overseas markets.

PSA has made no comment on the potential van partnership. However, it won’t happen in Europe, because GM’s Adam Opel subsidiary has contracted with Renault to supply its Movano and Vivaro vans.

Vans are important to PSA, which sold 369,600 units last year. And while European van sales are down this year, cars are off even more.

Renault, meanwhile, is trying to fill its French factories again after moving some production to other markets. It reportedly is negotiating with partner Daimler to share components on large vans, and recently announced that it would begin producing 82,000 Nissan Micras annually at its plant in Flins in 2016.

The deal is surprising because the Micra is a small car, and Renault makes its own small Twingo in Slovenia. Flins is the factory that is building Renault’s electric Zoe, as well as some Clio production.

Renault renegotiated a labor agreement with its unions in March, dubbed the “contract for a new dynamic of growth and social development of Renault in France.” The auto maker says the Micra deal bringing work to France is a result of that contract, in which it promised to increase production in the country by 180,000 units, including 80,000 by partners.

The current Micra, launched in 2010, is manufactured in Mexico, Thailand, India and China.

The potential deal with Daimler reportedly involves shared components for the Renault Trafic and Mercedes-Benz Vito and Viano. The large-van project may not involve production in France, although Renault makes the Mercedes Citan based on the Renault Kangoo at its factory in Maubeuge.

Daimler makes the Volkswagen Crafter as a version of its Sprinter van, but VW reportedly is talking to its truck subsidiary MAN about a future version of the Crafter, so Renault and Daimler may look for more van cooperation in the future.