The largest publicly announced investments in an automotive plant in France this year have come not from a French company, but from Toyota and Daimler. The Japanese company announced in January that it will spend 400 million euros ($471 million) to upgrade and expand its factory near Valenciennes in northern France. Mercedes-Benz plans to spend 500 million euros ($589 million) to produce a compact electric vehicle, part of the company's new EQ line, at its 20-year-old Smart factory in Hambach, in eastern France. It will be the first Mercedes passenger car produced in France when production starts in 2022.
Other recent key investments have come from PSA Group, as it revamps its European production footprint following the purchase of Opel last year. PSA is ramping up production of gasoline engines at its plants in Tremery and Douvrin, adding a night shift to produce vans in Hordain, building a facility to produce automatic gearboxes under license from Aisin at its own site in Valenciennes, and increasing production of manual gearboxes in Metz. PSA has not revealed the cost of the projects.
Toyota produces the subcompact Yaris for buyers in Europe, the United States and Canada at Valenciennes. Although a slow seller in the U.S. market, the car sold nearly 200,000 in Europe last year. More significantly, Toyota's investment will modernize its French factory and prepare it to produce a second car on Toyota's New Global Architecture. Valenciennes' annual capacity will increase to 300,000 vehicles a year, up from 230,000 currently. About 300 temporary workers will be hired, with the possibility of an additional 400 new positions.
The project is a win for French industry investment. Toyota had been considering an alternative of investing in Eastern Europe, but the French government agreed to provide project support of up to 4 million euros. The city of Valenciennes committed 5 million euros, and the regional government 11 million euros. Those commitments won the project, Xavier Bertrand, the regional governor, told the French newspaper Figaro. "Five percent of the investment is what made the difference," he said.
French President Emmanuel Macron made the trek to France's economically depressed north to announce the investment. Macron toured the factory with Didier Leroy, Toyota's executive vice president who was the inaugural director of the factory, and saluted the employees for their culture of "productive social dialogue."