Attention, new sparks in perspective between France and Germany. After the dissensions on Mercosur, the SCAF, the combat system of the future and those on the seizure of the assets of the central bank of Russia, a new subject could well further strain relations between the two heavyweights of the European Union: European preference in the automobile sector.
Supported by the Elysée for months and defended tooth and nail in Brussels by Stéphane Séjourné, the vice-president of the Commission responsible for industrial strategy, the idea of imposing a local content threshold in the production of vehicles manufactured on European soil has gradually established itself in European debates… Except that nothing is yet set in stone.
Initially, a precise percentage of “Made in Europe” as well as the exact outlines of the rule (electric battery included or not) were to appear in the “automotive package” presented in mid-December by the Commission. But the negotiations dragged on and despite pressure from the French commissioner, the decision was finally postponed until January 28. The measure should therefore appear in a more global package called the “Industrial Accelerator Act”. “Obtaining an agreement on this subject is essential for France, which has agreed to let go of the 2035 milestone concerning the ban on sales of thermal vehicles,” underlines an observer.
For France, this European preference has two objectives. First, force Chinese car manufacturers who wish to produce in Europe to work more with local subcontractors. The stakes are high. Their total production capacities could increase from 200,000 vehicles in 2026 to 750,000 in 2027 and more than a million by the end of the decade. However, the local content of their production should hardly exceed 30%, according to estimates from Clifa (the liaison committee of automobile suppliers). “This is very little when we know that three-quarters of the value of a car comes from the components purchased. The added value of the manufacturer is in reality quite marginal. With this European preference, it is a question of preventing the Continent from becoming a simple assembly zone”, analyzes Arnaud Aymé, France director of the Sia Conseil firm. A threshold which would also be imposed on European manufacturers who have tended in recent years to source more and more components manufactured outside the Union – in the Maghreb, Turkey and China – to somewhat restore their margins.
Subcontractors versus builders
The fact remains that German manufacturers have little taste for such an obligation. “They especially fear commercial retaliation from China while the Middle Kingdom remains an important market even if they are losing market share there too,” continues Arnaud Aymé. At the publication of the “automotive package” and while the idea of local content was mentioned, Hildegard Müller, the president of the very powerful association of the German automobile industry (VDA) put her feet in the dish: “I do not hide my disagreement with the strong French domination in terms of local content. I believe that German interests are insufficiently represented there.”
A battle that hides another, that which pits European manufacturers against subcontractors from the Continent. “The opposition is head-on because their interests are divergent,” adds Arnaud Aymé. Equipment manufacturers are calling for a local content threshold of 75%, while manufacturers are calling for a limit of 60%. A figure which will say a lot about the influence of large manufacturers on the European Commission and Council.
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