(News Bulletin 247) – Several manufacturers and equipment suppliers in Europe, including Renault, are making clear progress after the President of the European Commission announced the opening of an investigation into subsidies to Chinese manufacturers.

While the CAC 40 suffered a little this Wednesday (-0.5%), one compartment particularly stood out: automobiles.

Renault rose 2.2%, and the equipment manufacturer Forvia gained 2.8% around 12 p.m. In Frankfurt, Volkswagen advanced 0.1% but gained more than 2% at the start of the morning.

“It is this morning’s announcement from the European Commission that explains the rise in automotive sector stocks. The European Union has decided to investigate subsidies to these players, which appears to be very positive and constitutes a first not to protect local manufacturers. Especially in a market where a lot of investors are wondering to what extent the Chinese threat can penalize European manufacturers,” explains Valentin Mory, analyst at the independent research firm AlphaValue.

Several Chinese automobile groups, such as BYD or MG, have expressed great ambitions in electric vehicles on European soil.

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The “mass market” at the heart of the game

“This is positive for manufacturers like Renault, Volkswagen or Stellantis, because these ‘mass market’ players are the most affected by Chinese competition,” adds another analyst.

The President of the European Commission Ursula von der Leyen, in fact, declared this Wednesday in a speech that the EU was opening an investigation into Chinese public subsidies for electric cars in order to defend European industry.

“Global markets are today flooded with cheap Chinese electric cars, the price of which is kept artificially low by massive public subsidies,” argued the German.

“European companies “are often beaten on price by competitors benefiting from enormous public subsidies. We have not forgotten how much our solar industry has suffered from China’s unfair trade practices,” declared the president of the European executive.

Positive for equipment manufacturers

If the benefits of this offensive are obvious for manufacturers, it should be noted that equipment manufacturers have many Chinese customers.

“The fact that equipment manufacturers are taking more and more orders from Chinese manufacturers protects them against a rise in power from these groups. But this still remains less certain than their activity with European manufacturers, their historical partners. Even more so. that there is the idea of ​​selectivity: certainly the equipment manufacturers are working more and more with Chinese groups but we also expect that some of these Chinese manufacturers will be scrapped,” explains Valentin Mory.

“Traditional manufacturers remain the bulk of their customers. Tesla and the Chinese groups together represent a maximum of 10% of turnover,” says another financial analyst.

Recall that UBS bank recently advised selling Renault and Volkswagen shares, citing increased competition from Chinese competitors as a negative factor.