“Back to the future in the automotive industry”

Belcome to… 1975. Let’s hope that this new year will see the recovery of an economy hard hit by the oil crisis. The government of Jacques Chirac will present, in January, a reform of unemployment insurance and a support plan for industry. The automotive sector posted a further drop in sales, to less than 1.5 million vehicles. Renault’s R5 continues to take the top spot in sales.

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Back to the future. Since 2020, the French automotive industry has returned to the seventies. Not only because Renault should release its new electric R5 in 2023, but above all because of the level of its sales. Over the whole of 2022, new car registrations barely exceeded 1.5 million vehicles, i.e. the level of the years 1974-1975. They are down 7.8% compared to 2021, and especially 30% compared to 2019. In less than four years, almost a third of sales have evaporated. A historic plunge, a metaphor for the three challenges facing us at the very beginning of January 2023: economic, ecological and societal.

The automotive industry is a major economic force in Europe. The continent is the second largest car producer in the world, behind China, and the largest exporter. Its industry employs, directly and indirectly, more than twelve million people, including more than one million in France.

Overpriced cars

France is the second-largest European producer of vehicles, behind Germany, and the car in the broad sense is, according to the union of the profession, the first contributor to the budget of France through VAT, fuel taxes, tolls and other insurance, which brought in more than 73 billion euros to the State in 2019. The reasons for the tumble are known: shortages of all kinds, soaring oil prices and price inflation that makes potential buyers think.

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Beyond that, this crisis also bears the mark of a technological breakthrough, such as the sector had not known for more than a century. The 2022 data proves this. Amid this slump, electric car sales have raced in the other direction. Their sales have exploded by 25%. In four years, they have gone from 1% of the market to 13%. And this, despite the spectacular drop in registrations of plug-in hybrid vehicles. The psychological barriers have fallen: the battery-powered car, without any heat engine, won the game much earlier than the experts imagined.

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