The recent news from Peugeot brings home just how dire the current economic situation is, particularly in relation to the cars industry, as the French manufacturer announced their first-half net loss: a gargantuan €819 million euros.
It’s not as though people were expecting the company to be doing particularly well. All major analysts were anticipating that Peugeot would come out of the year in the red. But a loss of these proportions went beyond anyone’s expectations: it is more than double the expected deficit.
The response was, of course, very quick. The first to act was the American financial company Fitch, who reduced the long term rating for Peugeot from BB to BB+, showing how little trust they have in the French manufacturer’s potential to recover. On a grander scale, French society itself responded to the news. Peugeot announced a need for job cuts, and this prompted thousands of their employees to protest, some even showing up at the company’s headquarters. The new socialist government, led by Francois Hollande, was also very hostile to the idea of cutting employment.
These responses are not unexpected as the French automobile industry, from the engineers in the factory all the way to the managers dealing with second hand cars for sale, sustains more than half a million workers over the entire country. Peugeot in particular are a symbol of the national industry: their rampant lion belies two-hundred years’ worth of business history, with the last one-hundred and fifty dedicated to cars. They are the greatest car manufacturer in France and the second greatest in Europe. No wonder that seeing them flounder is catching everyone’s attention.
The French government has responded by highlighting a number of measures meant to encourage electric cars and other environmentally friendly engines. It is a stretch to say that all of these measures were put in place in response to the Peugeot crisis, as they had been planned long before the bad news emerged. It remains to be seen if these measures will do anything to support the local car industry in France. The French are buying fewer cars than they used to but is this because they are worried about the environment, have alternativ transport or just because they can’t afford them?