Industry Trend Analysis - Le Pen's Trump-Style Threats Pose Small Risk To Renault, PSA - MAR 2017

BMI View: Both PSA Group and Renault face the risk of rising public relations challenges as the French presidential elections in April 2017 draw closer. Threats by Presidential candidates, particularly Marine Le Pen, to force companies to repatriate investment will, however, be unlikely to be carried out.

We believe that political pressures on French manufacturers, PSA Groupe and Renault Motor, to invest more in France will rise in the run up to and following the French presidential elections in April 2017, placing a heavy strain on the public relations image of these two companies. However, we stress that current threats being made by presidential candidate, Marine Le Pen, regarding forced repatriation of investment into France are largely rhetoric and cannot be easily carried out if she is elected president. We stress that this piece of analysis is a risk-focused piece and that a Marine Le Pen presidency is not our core view given that we still maintain that the Les Republicains party's candidate, Francois Fillon, will secure the presidency in 2017 ( see ' Hollande Not Seeking Second Term, Socialists Still Facing Defeat ' , December 2 2016).

In January 2017, during an interview Marine Le Pen clearly demonstrated her support for targeting large French multinational automotive companies in a similar manner to US president-elect Donald Trump's targeting of American companies such as Ford Motor. This hints that she may build part of her campaign on pressuring large French companies to reign in foreign operations in favour of investing in domestic activities, which will appeal to her support base of voters disenfranchised with globalization and apparent lack of patriotism amongst French multinationals. For this, the automotive industry will act as an easy target given the decline in employment in the sector ( see chart above), its strong role as a major employer in the country and the apparent strength of French manufacturers with sales for PSA Groupe having risen 5.8% in 2016 and Renault sales rising 13.3%.

Falling Employment Fanning Public Disapproval Of Carmakers
France - Automotive Industry Employees
Source: CCFA, BMI

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