How can French carmakers develop in China?
- French carmakers, as observed in a recent analysis, have seen their sales plummet on the Chinese market in recent years. The PSA group fell to 115,000 sales in 2019 against 730,000 in 2015, Renault to 18,000 sales against 72,000 in 2017. How the two French carmakers can still operate in China, in an increasingly competitive environment? How these carmakers can differentiate themselves to popular German brands (Volkswagen, Audi, BMW, Mercedes) or the less expensive Chinese models?
- Inovev thinks that a way which should be explored would be to rely on the image of luxury products that France represents in this country. Up to now, French carmakers didn’t succeed to create luxury or premium brands in China (or in other markets). DS from PSA tried to develop but, so far, still cannot propose models which can be seen as different (in terms of design or technologies) from other products proposed by main stream brands (European, Japanese or Korean) or even Chinese local brands.
- On the other hand, France is renowned in China on luxury cosmetic and fashion fields and Chinese tourists are very fond of these goods when they visit France. Therefore, French carmakers should capitalise on this success not in a minor way as today (promoting new cars with Paris Tour Eiffel or Champs Elysée in the background is not enough), but with a major ambition: creating a real luxury brand in association with and using the name of a luxury fashion house!
- Luxury French fashion houses (Louis Vuitton, Hermès, Channel…) has a tradition of mastering luxury products and are organised to always maintain a very high level of finished products: human resources skills and knowledge, materials choices, relation with suppliers, marketing, brand image management, customer experience…
The current organisation of French carmakers (technical centres, sales channels) limit the emergence of a real “Premium or Luxury” philosophy and therefore brand.
The current organisation of French carmakers (technical centres, sales channels) limit the emergence of a real “Premium or Luxury” philosophy and therefore brand.
- In addition, French carmakers should learn from a recent success story of a new Premium brand recently launched onto western markets and also Chinese market: Tesla. Of course Tesla is famous for its battery electric vehicles (BEVs) but has also to be analysed as the only recent brand which succeed to compete with German Premium brands, in a such short period of time. French carmakers, and especially Renault-Nissan group, is well placed in the BEV market with models relatively well sold (Nissan Leaf and Renault Zoe). It has therefore the knowledge on how to produce BEVs.
- The conclusion of this short analysis is that French carmakers with its current products, failed to convince Chinese customers and to take advantage of the last 15 years booming market. A new opportunity is emerging with electric cars. French carmakers should seriously considered a disruptive way to address the future needs of the 1st worldwide market, and creating a new luxury electric automotive brand using a French luxury house could be an answer.
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