Wednesday 9th April 1986
The French government ruled against the privatisation of leading French carmaker Renault. The privatisation of Renault, France’s second largest carmaker to PSA Peugeot, has remained a highly debated issue since the 1986 decision. In 1994, the government sold shares of Renault to the public for the first time at 165 francs per share. The sale dramatically increased the company’s revenue, but the French government remained the majority shareholder. Between 1996 and 1997, the market for cars in Europe grew precipitously, with the most marked increases in France. Renault, often scorned for its “public sector” policies, failed to capitalise on the growing markets. Instead foreign competitors like Volkswagen and Fiat took advantage. In 1996, Renault lost over $800 million. Renault and Peugeot were the two weakest of Europe’s Big Seven carmakers. Economists blame the French carmakers lack of success on its protectionist policies, and more specifically on the unwillingness of PSA Peugeot and Renault to merge, a manoeuvre that would radically lower production costs for both auto-making giants. The question remains whether or not the government will fully privatise Renault. With economic boundaries in Europe falling rapidly, the days of France’s nationally run car company may be numbered.