Should car manufacturers outsource more operations to cut costs?

In 1990, Renault and Peugeot-Citroen collectively assembled nearly 3.3 million autos in France. Last year, however, they produced some 1.76 million - with three out of every four of the former company's models being made outside the country.

Domestic car manufacturing in Germany remains "more resilient", the newspaper noted, adding it made some six million autos in 2009.

It suggested reasons for this include the country's ability to internationalise their production system while still maintaining a strong base and the fact that unions have a "flexible and pragmatic approach", meaning large-scale job cuts could be avoided.

There is also one other important factor for the market. "The Made in Germany label is crucial for the image and marketing of premium carmakers that depend on exports for around two-thirds of their sales," stated the publication.

PA automotive expert Thomas Göttle comments: "For the premium manufacturers it is inevitable to bundle volume in the segment rather than outsourcing the production. The "Made in Germany" is too strong and would be damaged by making these brands in low cost countries. However, to remain competitive in the future and to develop other segments the premium OEMs are forced to find new brands like Smart or Mini where customers do not require production in Germany."

In Britain, Rolls-Royce has been offered £45 million for new factories as part of a £150 million government fund to support the country's manufacturing, which business secretary Lord Peter Mandelson said is "at the heart of Britain's knowledge economy".

However, the Independent asked if the finance and efforts to support UK industry is "too little, too late"?

Göttle says: "UK has almost lost its manufacturing base. Compared to Germany, the UK is forced to outsource because of two reasons:

1. UK has a limited competitive supplier portfolio

2. The distance to take advantage of low cost countries (eg Eastern Europe) is very long."

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