Focus on France Ian Sparks reports from Paris

EURO-REPORT

FOCUS ON... France

Ian Sparks reports from Paris on foreign car imports (unwelcome) and foreign tourists (welcome).

France has accused South Korean car giant Hyundai of ‘dumping’ their vehicles on the French market in an illegal attempt to flood the country with cheap imports.

Furious Industry Minister Arnaud Montebourg said the Asian manufacturer was heaping more problems on France’s already ailing motor industry with its bid to massively undercut French carmakers like Peugeot and Renault.

The minister said the ‘predatory’ pricing policy by Hyundai and its sister-brand Kia was in breach of the EU-South Korea freetrade treaty because it was a ‘blatant bid’ to eradicate competition from the marketplace.

Dumping – which is illegal under World Trade Organisation rules – happens when a company sells a product in a foreign market at a price lower than it normally charges in its home market in an attempt to ‘steal’ customers. The WTO rules state that retaliatory measures can be taken if dumping is proved.

But Hyundai swiftly hit back by insisting that half of the cars exported to France were actually made in the Czech Republic, which is a member of the European Union – hence the rules on dumping do not apply.

Mr Montebourg told a socialist party rally in La Rochelle in August: “The two brands, Hyundai and Kia, are competing with our manufacturers in unacceptable conditions of dumping.

“South Korean car exports to the EU jumped 50 per cent in January and February this year, compared with a year earlier, and the increase is mainly in the segment of small diesel-engine cars, where our French car makers are traditionally strong.

“The EU treaty allows us to demand an urgent investigation into any sudden rise in imports to one or several member states, which has clearly happened. We are asking for the EU to take immediate action to reverse this.”

Mr Montebourg also reminded his audience that according to European automobile manufacturers’ association figures, Hyundai and Kia together sold 391,511 cars in the European Union in the first half of this year, up 17 pre cent from the first six months of 2011, while the two brands together increased their market share to 5.9 per cent in the first half of this year, from 4.7 per cent a year earlier.

And recent data from the car industry group CCFA showed that sales of French cars fell 14 per cent in the first seven months of the year, while sales from Hyundai Group in France rose 30 per cent from the same period a year earlier, Mr Montebourg said.

France’s socialist president Francois Hollande has pledged to plough €1.8 billion in subsidies over three years into the French car industry, where the nation’s biggest car manufacturer PSA Peugeot Citroen recently announced 8000 job cuts between now and 2015 and a 2012 first half loss of €819 million.

Hyundai Motor Europe’s senior vicepresident Allan Rushforth later told France’s Le Monde newspaper: “We are not unfairly competing with France’s car industry. Nearly 90 per cent of the Hyundai cars registered in Europe during the first half of 2012 were built outside of Korea.

“More than half of those cars were made in Hyundai’s assembly plant in the Czech Republic, which is a member of the European Union. A further 19 per cent came from India and 15 per cent from Turkey.”

A spokesman for the EU’s Trade Commission told le Monde this week that no decision on France’s complaint had yet been made. France’s tourism industry also looked like it was heading for one of its worst years on record this summer – until it was clutched from the jaws of disaster by the end of the Muslim holy month of Ramadan.

The tourist sector was already being hit by the economic crisis and unseasonably wet weather when the Islamic period of daytime fasting, which lasts for 30 days, began on July 20 – meaning many devout Muslims chose not to travel abroad on holiday.

Tourism industry figures show that hotels suffered a five percent drop in bookings compared to 2011 over the Ramadan period, before the holy month ended and thousands of wealthy arabs came rushing to France for their summer holiday. From August 18, four-star and five-star hotels saw a new wave of arrivals, mostly from the Gulf states and other Middle Eastern countries, according to a tourism study by consultants MKG.

On the French Riviera, the resort of Cannes saw bookings leap by 4.8 per cent and the average price of a room go up 22.1 per cent to €441.50 a night. In Paris, booking soared by six per cent and hoteliers pushed up the average price of rooms by a third from €300 to €400 a night.

But the owners of France’s top hotels must also be hoping that their wealthy guests will all pay their bills – unlike Saudi princess Maha AlSudairi, who was caught trying to sneak out of Paris’s luxury Shangri-La hotel with her entourage of 60 servants earlier this year because she couldn’t pay her six MILLION euro bill.

But she was caught by hotel staff at 3.30am as her staff were loading scores of suitcases into a fleet of limos in the street outside. Her bill was finally settled by the Saudi Arabian embassy while Princess Al-Sudairi checked into the luxury Royal Monceau Hotel near the Champs-Elysees, owned by ‘family friend’ the Emir of Qatar. n

“South Korean car exports to the EU jumped 50 per cent in January and February this year, compared with a year earlier, and the increase is mainly in the segment of small diesel-engine cars, where French car makers are traditionally strong.”