While the European Automobile Manufacturers Association (ACEA) has been urging European governments to provide more support to their members and arguing for the relaxation of non-European markets prescriptive trade barriers, Peugeot have been forging a different route to success in the large emerging markets of the east. SAAB seems likely to follow if the investment by two Chinese companies goes ahead.
PSA/Peugeot-Citroen has an established relationship in China with the Dongfeng Motor Group. Jean-Marc Gales of PSA says that the company intends to expand its annual production in China over the next five years to make it the brands largest production plant. A second deal with Chang’an Automobile Group should further extend the French manufacturers access to the lucrative Chinese market. 2010 saw the group rise in the ranks of new car sales to seventh position; a position on which the group firmly intends to improve in the coming years.
The ACEA argue that the restrictive trade barriers in developing economies are no longer necessary to protect already robust manufacturing industries in China and India. India exports over 250,000 vehicles to Europe, while European exports are nearer 5000. Add to this the fact that it is Chinese collaborations that are helping Peugeot to increase its sales in a difficult climate and may well be the only route to salvation for SAAB, it is clear that European manufacturers are facing a pressing need to access Eastern markets on a more equal footing in order to protect jobs and compete effectively.
While Peugeot has stated it will not be looking to reduce its workforce in Europe, the fact remains that without adequate access to Chinese and Indian markets, other European producers can only remain threatened. The ACEA argues that this is also bad for the development of sustainable technologies to reduce emissions. Their members are key players in the development of these technologies – but argue that they need EU governments to invest in the technology and infrastructure to support these changes. If the current situation remains – cheaper petrol and diesel models available manufactured in non- EU States will certainly out-compete the best green technologies the European manufacturers can come up with.
For Peugeot, and perhaps SAAB, joint ventures with non-European manufacturers may help them to maintain their brands and competitiveness. However, if European governments do not invest in infrastructure changes, working in cooperation with European manufacturers, Chinese domination of the car manufacturing industry may well be the shape of things to come.
Author Bio: The future of the European Car industry is looking increasingly uncertain as uneven competition rules bar easy access to emerging markets, car finance specialist Carloan4u takes a closer look in this article at what the future may hold.