Bloomberg News

Peugeot, Renault Face Pressure as France Probes Repair Costs

April 11, 2012

PSA Peugeot Citroen (UG) and Renault SA (RNO), France’s biggest carmakers, may face pressure to lower fees for high-margin repair services as the country’s antitrust authority targets rising costs in the automobile sector.

Car repair and maintenance prices rose 28 percent from 2000 to 2010 in France, even after adjusting for inflation, Autorite de la Concurrence, France’s main antitrust body, said in a study released today. This compares with an increase of less than 10 percent since 1998 in Germany, the regulator said.

“We’re wondering about this French singularity,” Bruno Lasserre, the antitrust authority’s president, said at a press conference today in Paris. “Is the lobbying from French carmakers strong on this subject? Yes, definitely. But we have to take into account the arguments from all stakeholders, be they consumers, suppliers or the manufacturers.”

Peugeot and Renault, bracing for the fifth straight year of declining auto demand in Europe, rely on service revenue to offset slumping vehicle deliveries. The French carmakers tend to generate higher profit margins from the repair and maintenance segment than car sales, according to the study.

“The spare-parts business has always been a source of decent profitability,” Jens Schattner, an analyst at Macquarie Group in Frankfurt. “Anything that threatens that profitability would be negative for French carmakers.”

The prices of spare parts rose 13 percent from 2000 to 2010 in France, while they fell everywhere else in Europe over the same period, according to the study. French carmakers control about 45 percent of the country’s repair market through garages that belong to a network approved by the manufacturers, the Autorite de la Concurrence said.

France’s CCFA automaker association and two other auto industry trade groups objected to the findings. The statistics and the implications about competition in the report may be “erroneous,” they said today in a joint statement.

A liberalization of the sector, which may benefit consumers and independent suppliers, would imply a change in French law, Lasserre said. France will hold the first round of presidential elections on April 22.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


Coke's Big Fat Problem
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus