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MNCs Dominate the Auto Parts Market in France

From| June 05,2007

Many of them are American-owned French or European operations. The FIEV (The French Vehicle Equipment Industries Association) includes the main parts and equipment suppliers in France. Large U.S. suppliers are already present in France and are doing well. Of the twenty top suppliers, eight are American (Delphi, Visteon, Johnson Controls, Lear, TRW Automotive, Dana, Arvin Meritor, Federal Mogul). There is little or no room for mid-sized exporters in this very closed environment, where competitive requirements, transportation costs, etc., make it very difficult for firms not physically established here to sell their products to OEM and OES.  U.S. industry generally supplies the French market from European subsidiaries or local joint ventures.  Direct imports from North America continued to drop in 2005 to $560 million.  The trend is to source in countries such as China, Japan, Taiwan and India to the detriment of the U.S.

The FIEV has mapped the evolution of the supply chain, and it is obvious that French manufacturers encourage their key suppliers to co-locate manufacturing plants adjacent to the in-country assembly operations, or in nearby European countries.  Since France’s exports and imports of parts and components and assembled vehicles are largely within the euro zone, the use of the euro as a transaction currency is a primary factor in source selection.

Most of the larger vehicle manufacturers have rationalized their suppliers’ base of components and sub-assemblies and have stopped manufacturing parts in-house wherever possible.  The trend is toward Tier One suppliers that provide complete sub-assemblies of parts sourced from the variety of Tier Two and Tier Three component manufacturers.  Key suppliers are gaining greater competence in modules, systems, and even complete vehicle manufacture, and have to meet the highest standards to be able to compete in this industry.

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