Sales growth for passenger cars in France
is very steady at the moment having averaged 12.4% over the closing three months of 1998
and having hit 13.3% for each of the opening months of 1999. Sales in February were
157,739 from 139,235, and that took the annualised selling rate to 1.98 million and
rising. If the current momentum could be maintained then 1999 would see something like
2.16 million cars sold, but the WAIT forecast is 2.08 million and we still feel that is
the most likely outcome.

The market is dominated by the indigenous
trio and it is usually a close run thing between PSA and Renault for the overall market
leadership position. Currently it is PSA who have the whip hand, and the reception being
afforded to the Peugeot 206 should help the privately owned company to stay in control for
the rest of the year. Renault are no slouches, especially on their home turf, and PSA will
have to keep their guard up right until the close of the year.

Both PSA and Renault recognise that they
are big fish in a small pool and that they will have to look to the future with anxiety if
they are not to be swamped by the bigger boys from other pools. Nationalistic pride has
protected the French trio to quite an extent, and legislation has kept the Japanese at bay
ever since they first appeared as a genuine threat some two decades ago. But all of that
is about to change with the coming of the new millennium and some positive action would
not go amiss.

Renault has made it clear that they are
prepared to go where others fear to tread, and have signalled the intention to take a
major stake in Nissan, which is good news for the beleaguered Japanese company, but which
will be a major gamble on the part of the French company. Nissan has massive debts and the
danger is that they are not all visible. If Renault proceeds with its ambitious plans,
then they will have to hope that what they have seen to date is an ice floe and not an
iceberg.

Peugeot says that it recognises that it is
not big enough to succeed in the current climate, but is looking to secure its future
through strategic relationships on specific projects rather than a full blown merger. They
may end up with no choice on that matter, but the question would be, where is there a
natural fit for PSA? The difficulty is that there doesn’t seem to be a logical
partner for PSA in the way that Chrysler was for Mercedes-Benz. There is a school of
thought that suggests that PSA and Fiat may eventually be forced into each other’s
arms for mutual protection. No doubt that would give additional volume and strength from
numbers, but whereas the DaimlerChrysler merger has had little impact as yet on the
various operations world-wide, there seems little doubt that if PSA and Fiat combined, 100
plus 100 would add up to little more than 150 by the time a full shake out had taken
place.