As Cars Burn In France, The Industry Of Hope Booms

New Year’s Eve was the main event. And it didn’t disappoint: 1,193 vehicles were burned in France in the course of a few hours, said Interior Minister Manuel Valls. Up 4% from 2009, when 1,147 vehicles were burned. A tradition no one has the balls to explain. In the days leading up to the annual rite, Valls had promised “complete transparence,” in contrast to the Sarkozy government, which had hushed up the numbers since 2009. But it’s a year-round event: 40,244 vehicles were burned during 2011 and 43,568 the year before. Even Valls was “shocked” by these numbers.

But the massive destruction of functional vehicles (most of them paid for by insurance) wasn’t nearly enough to bail out the automakers. New vehicle sales for the year 2012 dropped 13.9% from the already miserable levels of 2011. Only 1.89 million vehicles were sold, a low not seen since 1997, despite the growth of the population. Particularly alarming: sales by French automakers collapsed, PSA Peugeot Citroen by 17.5%, Renault by 22.1%. All hopes had been riding on their new models—the Peugeot 208 and the Renault Clio 4—which hit the market in the fall, but those hopes have since evaporated.

Other automakers got clobbered as well: Ford was down 19.8%, Fiat, which hardly anyone is buying anymore, fell 23.7%, only to be outdone by GM’s beleaguered Opel, down 23.8%. But there were winners: BMW was up 2.3%, Mercedes 5.3%, and Hyundai-Kia 28.2%! So the French automakers, like other French industries, have a complex problem: uncompetitive products in a morose market with unemployment that has been climbing with incessant brutality, and a tax quagmire of unprecedented proportions.

But there is one industry that has been booming under these conditions. The industry of hope. Française des Jeux (FDJ), third largest lottery in the world, 72% owned by the state, reported revenues for 2012, and they were hot! €12.1 billion, up 6.1% over prior year. An all-time record. Despite the attacks on its historic monopoly by online gambling.

FDJ prides itself in its 26.3 million “clients”—40% of France’s population of 65 million! Its products are sold in 34,300 retail locations: tobacco shops, bars, newspaper stands and, in French possessions overseas, grocery stores and gas stations. One retailer per 1,895 inhabitants—twice as many as post offices. They’re truly everywhere. And they beckon with hope.

Every day, FDJ says, 8-10 million people walk into these places to surrender voluntarily their hard-earned money, their unemployment compensation, or their social benefits in exchange for a tiny sliver of hope. The hope to become an instant millionaire. Alas, tiny it is: of the 26.3 million clients who in 2012 more or less regularly bought these slivers of hope, 41 became instant millionaires. The odds are not good. But unlike French cars, hope sells.

The record performance was aided by an “exceptional calendar,” including three Fridays the 13th (there was one in 2011), three propitious dates—November 10, 2012 (10-11-12), December 12, 2012 (12-12-12), and December 21, 2012 (21-12-12). They perked up the spirits of the lottery-ticket scratchers who shelled out €5.4 billion, up 7.5% from 2011. All games combined rang up €10.7 billion, up 3.7%. Sports betters, who went gaga over two international mega-events, the Olympics in London and the European Football Championship, handed €1.4 billion over to FDJ, a 27% jump from prior year. If only Renault could do that.

Of this ballooning revenue, FDJ “redistributed” 95%, or €11.5 billion. The largest chunk, €7.9 billion was paid out to its lucky “clients.” Over €3 billion was shuffled into the coffers of the state (lovingly called “general interest”), the vast majority via a 23.5% betting tax. And €587 million (4.9% of revenues) was paid in commissions to FDJ’s 34,300 retailers—€17,113 per shop, on average, a substantial source of income for these mostly mom-and-pop operations. That was up 6.1% from 2011, and 15.4% from 2010. There is no crisis in the industry of hope.

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