French automakers build delightful, practical vehicles that consumers love, but they cannot sell them for the premium prices that would ensure their long-term success.
Until Renault and PSA/Peugeot-Citroen learn how to make vehicles that can command a premium, much of their innovation, style and solid design will not get the recognition it deserves.
But now there's a more urgent problem and it's in the traditional volume segments: both the Peugeot 1007 and the Renault Modus aren't selling.
In the intensely competitive automotive environment of Europe, both French companies hold a place of distinction based on accomplishment.
Renault became a global power by buying a controlling stake in Nissan. A smooth integration has saved money and resources. Renault's product innovation works - the Scenic triggered a hugely profitable new segment. Bold design has spawned a strong family resemblance as well as new vigor in Renault's lineup. The low-cost Logan is giving Renault leadership in low-cost transportation.
Similarly, PSA has many strengths born of independence and strategic thinking. Following its disastrous involvement in Chrysler Europe in the late 1970s, PSA shunned mergers and acquisitions, opting instead for alliances and product-cooperation deals - today's hot industry trend. PSA dominates in diesels, Europe's booming segment.
PSA and Renault have one disappointment after another in premium-priced segments: Safrane, Vel Satis, Avantime, 607, C5, and probably the C6 as well. That's a problem, but it's mostly a longer-term strategic issue.
In the short term, both automakers must focus on their all-important core volume market.