The wonderful world of vehicle manufacturers is under massive load to change, driven by legislation, consumer choices and international trading. The collision repairers are down stream of this, and the increasing chaos will have quite an effect, eventually.
When Renault married Nissan….
Nissan was a much bigger company on the verge of complete collapse. Of course, as the Alliance brought Nissan back, Renault remained the smaller company. In time, the French Government managed to issue ‘loans’ to keep it afloat in exchange for politicians sitting on the board – in effect the French Government became a shareholder.
The Government of Japan noticed this imbalance, as did Nissan – hence the whole Carlos Ghosn affair. The lowly minister who created this situation? The man who went on to become the President of France, Monsieur Macron….
Fast forward to the present CEO Luca de Meo, and the vision to establish Ampere as an electrification / technology company, to sell off the ICE business to Geely. The back drop was weakening financials and the rumbling shareholder dispute. Nissan and Renault split their joint purchasing agreements in 2023 as part of the deal which saw Nissan investing in Ampere. The thorny question of government board seats was eliminated.
When Peugeot did a lot of marring around the world
Stellantis was formed from the merger of Peugeot-Citroen-DS with Fiat Chrysler Automobiles, after Peugeot had taken Vauxhall Opel on board. Indeed, Stellantis is a Peugeot centric business. The entire Stellantis leadership team is headed by CEO Carlos Taveres, a long-serving man of Renault, who is very clear that:
- Euro 7 exists for such a short time before ICE was planned to be banned there would be almost no return on investment – as well as a miniscule improvement on Euro 6 d temp tail pipe emissions.
- The EU27 seems to be pushing automotive policies which favoured China.
- The threat from China for EU27 vehicle manufacturers.
- The poor productivity of the Stellantis plants in Italy.
Stellantis operates nearly all automotive production plants in Italy – they don’t control Piaggio, Zonda or Ferrari. In 2022 the Stellantis plants in Italy built 486111 cars (France – 950188) and 234798 vans (France – 428675). The Italian Government weighed in by saying they need investment to build 1 million vehicles per year, and a seat at the board (seems familiar). The threat was if this did not happen, they would seek another vehicle manufacturer.
The latest between Italy Prime Minister Giorgia Meloni and Stellantis CEO Carlos Tavares? Stellantis would consider building vehicle with China based partner Leapmotors in Italy from 2026 onwards.
Within Europe, and specifically ‘Fiat’, Poland plants build vehicles faster, cheaper and to a higher quality than Italy. The Italian PM can be upset as much as she likes – until that dynamic is fixed, the threat to Italian vehicle production will continue.
Meanwhile Stellantis seemed to be interested in a merger with Renault, although both companies denied this. Investors, who are rather less polite, think Renault needs a larger partner now that Nissan could leave, and so is a viable acquisition. Remember, Stellantis CEO Carlos Tavares and a good deal of his team know exactly, precisely how Renault works – an advantage lost when Stellantis parted company from Calros Tavares.
The ripple effect
These two examples show how established vehicle manufacturers are running from pillar to post, just to survive. The upshot for the employees is a higher degree of job uncertainty and vast projects to integrate each new partner or acquisition into outward facing functions such as parts supply. In the opening stages of 2024, we have seen 7150 jobs to be eliminated from Continental, and Forvia (the name of the merged suppliers Fauricia and Hella) will remove 10000 jobs by 2028.
It is chaotic enough that the EU28 initiated, for example, a helter-skelter system of staged emission standards, throwing more curved balls than any known sporting event in the process. The result has been a demonstrable increase in vehicle build cost, which does not reflect in vehicle value. Quite honestly it has been raining bad news for far too long.
Fiat 500e was built on a unique platform from 2021 alongside the 2007 Fiat 500. The 500e will be replaced with STLA Small based vehicle in 2026, not long after the 2007 Fiat 500 finishes. The 500e will be just 5 years old. Parts complexity on steroids!
The end result
Vehicle build allows us to consider repair opportunities, so if less vehicles are built, there will be fewer repairs. It is unlikely vehicle sales will decline in spite of demanding, as the UK does from the start of 2024, an increasing percentage of new vehicle sales each year powered only by electricity. For collision repairers the trend of downsizing manufacturing and removal of their suppliers has been underway since 2019, which means:
- Extended supply chains from component suppliers increasingly located in the Far East
- Difficulty in getting some parts, due to differences in approach to vehicle repair compared to regions outside Europe.
- Less importance given to Europe as the centre of the automotive world consolidates in China.
The risk is due to economics at least in the short term, it may be easier to replace the damaged vehicle rather than repair it. For any vehicle the best use of the invested energy is to repair it rather than throw it way. This means parts required to do that have to be readily available, along with access to repair information.
So, what’s next for repairers?
If we think the world as seen by our governments, the wealthy and advertising agencies is true, by this time next year battery electric vehicles (‘BEV’) will be everywhere. If we consider BEVs are still quite expensive compared to equivalent size vehicles from the very same manufacturers, that providing power for charging at home, at work, anywhere – is a huge challenge. The idea works in Ad Land but not as often in reality.
For repairers the volume of BEVs will remain tiny, until the day electricity is supplied 24 hours every single day without failure, and is substantially cheaper too. Until those blockages are removed only the most dedicated followers of BEVs will buy them, and in a free market economy, that’s fine.
However, increasing complexity due to connectivity and ADAS, for example, means even the most basic new vehicles powered by petrol or diesel are way, way more sophisticated than even a decade ago. The EU27 BEV version of Renault Kwid is called ‘Dacia Spring’ – the facelift has been announced for 2024, which gets the same central touch screen and instruments as the more expensive Renault Duster, also recently updated. Sophistication from the upper range is now on the bottom of the range models.
