With automakers and suppliers looking to take the initiative and expand in the wake of a recovery in the sales volumes, recent weeks have seen some of the major French suppliers announce a number of new ventures and projects. This month Renault is expected to announce a new strategic plan, with reports suggesting that the OEM is targeting a 5 percent margin and is looking for sales to break the 3 million vehicle mark by 2013. Overall the French market is recovering well, with new car registrations up 8.2% in January compared with the same month of 2010, even though benefits from scrappage incentive programs were no longer an influence having ended at the close of 2010.
Investments by French suppliers have been focused particularly in R&D and new technologies as well as growing their global footprint. Faurecia has signed a joint-venture agreement that will see them manufacture automotive exterior parts in China for the first time. The agreement with Ningbo Huazhong Plastic Products follows hot on the heels of the acquisition of Plastal activities in Germany and Spain in 2010. In addition to this Faurecia has acquired a 21.2% stake in Danish vehicle emissions specialist Amminex A/S for €19.6 milion. The investment is significant as the company is interested in the new diesel treatment technologies being developed by the company, in particular, the Ammonia Storage and Delivery System (ASDS) which Amminex has developed.
Valeo has also announced a major investment in a €17 million research and development plant in Galway, Ireland, creating 100 jobs over three years at a time when the Irish economy is struggling. The supplier acquired the site three years ago when it took over Connaught Electronics. Valeo also made a record number of patent applications in 2010, with 612 initial patents throughout the year, making the company one the most active patent filers in France and demonstrating that the company is stepping up its efforts to develop new technologies.
Plastic Omnium automotive revenue increased by 37.9% in 2010 over 2009 with significant increases in all geographic regions. The growth did reflect the acquisition of Solvay’s share of the former Inergy Systems joint venture and Plastic Omnium’s ambition was underlined by the company’s statement regarding the launch of 45 new projects and its ability to outpace market growth..
The challenges for suppliers lie in their use of technology. Peugeot Citroën’s recently announced joint venture with BMW to work on hybrid vehicles – an announcement similar to Renault’s tie up with Daimler last year – will mean that increasingly suppliers will be integrated into the organisation by outsourcing parts of the R&D and production process. Suppliers will have to look to new technologies in order to remain competitive in a global market where consolidation and collaboration create fewer global OEM groups but of increasing size. As this development gains pace, it’s likely that suppliers will see unit cost bases being trimmed as a result of growing synergies and joint purchasing. Above all, the best technologies that reduce emissions and increase fuel economy will be best valued. Recent developments at the French suppliers suggest they are moving in that direction.
