French car makers PSA (Peugeot – Citroën) recently made big news in France for having announced the lay off of 8 000 workers, not counting the thousands of subcontractors who will also lose their jobs. And why did they make this announcement? Because sales are down, mainly because their market is hugely European (remember the crisis?) and, unlike their rivals Renault & Volkswagen, to name but two, PSA have a) failed to internationalize or delocalize* and b) concentrated on middle range products,(no low-cost & no upscale) apparently failing in the process to retain a couple of essentials in marketing: Benchmark & Positioning and in doing so PSA have failed to keep abreast of or even in touch with a highly competitive market.
So with that fact in mind, and not forgetting that PSA (Peugeot-Citroën) is a privately owned company, the newly elected French Socialist Govt., pursuing the notion of “Made in France”, rather than “Made by France”, is mulling over currently politically correct “Industrial Renewal” measures to show they are on top of things, and by doing so hoping to keep the ratings agencies at bay. Actions such as another new green tax, or another “Cash for Clunkers” scheme or yet again the installation of a yearly technical control, or an urban tax (a thinly disguised anti-pollution tax) for old cars over 10 years old, are meant to “incite” a mature and sorely cash strapped, crisis ridden (home) market into buying what visibly they don’t want to buy when they, the Government, should be elaborating measures to “Encourage” PSA (Peugeot-Citroën) to internationalize*.
(*Even though successive French governments have done nothing concrete to stop firms from delocalizing (Delocalization, even the partial delocalization of low value-add operations, is very much a dirty word in France) the fact of the matter is that PSA totally failed to follow Renault in its conception of a low-cost East European destined range of cars, that sell very well in France thank you, or in its conquest of the Asian Market and the creation a vital partnership with a regional actor, with very clear “Win/Win” benefits for both parties.)
What is yet to be understood is, instead of looking to sanction PSA or “coercing” a captive, crisis ridden home market into buying what they don’t necessarily want to buy**, why the newly elected French (Socialist) Govt aren’t communicating on measures destined to help PSA export and expand in newer, more dynamic markets, such as the BRICS countries, where, it has to be said, the governments are a lot more active in encouraging companies, even if it means intervening “manu-militari” (i.e. by all necessary means) in company affairs to develop business, under the pretence that what’s good for the company is good for the country.
(** Be honest. If you had the choice between the German, Italian or Japanese equivalent and the Citroën DS5 which would you chose? I know which one I would choose if I had the cash!)
According to IMF statistics in 2010 4 of the 5 BRICS countries, without South Africa, already figured among the top 10 richest single national economies in the world. It’s no longer a question of developing countries “wanting” to play a more active role in world markets. These countries are the market and have a lot of cash to spend so perhaps instead of futilely insisting on unloading PSA’s excedent production onto an already saturated home market (“Flogging a dead horse” is the expression that comes to mind!)the French Socialist Govt. would do better by “encouraging” (sic “manu-militari”) PSA to develop these and other “Flourishing” markets.