Jobless Parisians mean fewer car sales in French market slump

Jobless Parisians mean fewer car sales in French market slump

With unemployment in France rising and consumer confidence at a record low, auto sales in the country have tumbled more than any other major European market this year.

Marie-Estelle Cevatheean dreams of a new car that would be better suited to her growing family after having a baby late last year. Instead, with no work, the 31-year-old Parisian can’t afford to replace her seven-year-old Citroen C3 subcompact.

“We don’t have the money yet to buy a new car,” Cevatheean said. “I need to find a job first.”

The plight of Cevatheean and other French consumers means more pain for French automakers Renault and money-losing PSA/Peugeot-Citroen.

Florent Couvreur, an analyst at CM-CIC Securities in Paris, said higher taxes are set to weaken demand further. “We haven’t hit the floor in France yet,” he said.

IHS Automotive forecasts new-car sales will fall 6.9 percent this year in France to 1.77 million passenger cars. Couvreur predicts the market could fall as low as 1.5 million vehicles.

Car sales in France tumbled 11 percent in the first half, versus a 10 percent decline in Italy, an 8.1 percent drop in Germany, and Spain’s 4.9 percent slip. This year’s fall in French car sales follows a 14 percent dive in 2012, according to CCFA, the country’s automakers’ association.

PSA and Renault together control 55 percent of their domestic car market. The nearest foreign competitor is Volkswagen, with 12 percent, according to CCFA.

“I’m afraid the French market isn’t yet stabilized,” said Jacques Aschenbroich, CEO of French supplier Valeo. France would represent an exception as the worst is over elsewhere in Europe, he said.

More than 3.26 million people are jobless in France, according to the national statistics office Insee. That puts the unemployment rate at 10.8 percent, the highest in 14 years. And consumer spending power has been weakened by a 70 billion euro tax increase over the past three years.

Soft demand has pushed carmakers to offer generous incentives to lure buyers. For signing a three-year lease on a Citroen C4 Picasso minivan in April, Andre Grall got a Samsung tablet computer valued at 500 euros, a case of wine and a cleaning kit for windshields and hubcaps.

“It’s the first time in my life I’ve gotten so many gifts for a car,” said the 62-year-old retired French railway employee. “They must be desperate.”