Christophe Perillat, chief executive of French auto parts supplier Valeo, issued a stern warning to European leaders about the threat of competition from China and urged the EU to create a level playing field for its auto industry, according to foreign media reports.

Christophe Perillat; Image credit: Valeo

Christophe Perillat: ‘Since January 2020, Europe's competitiveness vis-à-vis China has declined by 25 per cent due to higher energy prices, which in turn have led to higher wages and increased inflation. The European automotive industry therefore needs equal conditions to be sustainable. But I am not pitting Europe against China, but rather ensuring that the competitiveness gap between Europe and China does not widen further.’

Meanwhile, Christophe Perillat called for a European policy similar to the US Inflation Reduction Act, which would require foreign companies entering the European market to achieve a minimum level of indigenous value creation, in the US this threshold is currently 75 per cent.

Christophe Perillat warned that if Europe does not act, foreign firms will have a serious impact on the European car industry. ‘If we do nothing, there will be more auto parts shipped directly from China to Europe, whereas about 80 per cent of the value of today's cars is created by auto parts suppliers, and this poses a major risk.’

Christophe Perillat said that if Europe does not act, European production facilities may be relocated and more European companies will be forced to move their operations to countries with better conditions. If this is coupled with the pressures of the electrification transition and increased competition, the less competitive firms in the automotive sector may collapse, he added. ‘If companies are hit by two waves of shocks at the same time and are not prepared for them, the results could be catastrophic.’

Christophe Perillat noted that his concerns are not just for Valeo, but for the entire European automotive industry. ‘I am sure that Valeo is well prepared for the upcoming challenges, but I am very worried about the future of the entire European automotive industry.’

Christophe Perillat said that in order to maintain Europe's industrial and economic strength, Europe must take steps to safeguard jobs, maintain supply chains and ensure technological competence. ‘This is not only to keep European factories running, but also to ensure the long-term prosperity of the European region.’

Christophe Perillat's comments highlight the growing challenges Europe faces in competing with global automakers, and the urgency of overcoming them.

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