The French car industry is facing a perfect storm of challenges, including the shift to electric vehicles, offshoring, and fierce competition from Chinese manufacturers. Despite posting record profits, the sector is struggling to recover from the pandemic, with sales down 25% and factories closing or going insolvent.

The industry's woes are compounded by the EU's decision to soften its automotive carbon dioxide emissions rules, which may lead to fewer electric vehicles being sold in the coming years. The French government's reduction of the ecological bonus for purchasing an electric vehicle from €7,000 to €4,000 has also dealt a blow to the sector.

The competition from China is fierce, with the country producing 30.2 million vehicles annually, compared to France's 1.5 million. Chinese manufacturers are gaining market share, and their cheaper electric vehicles are making it difficult for European manufacturers to compete.

Experts believe that the solution lies in reinventing the industry with electric vehicles, smaller cars, and a focus on innovation. The European Commission has announced an action plan to support the sector, which includes investing in autonomous, connected EVs and developing new technologies.