PSA Peugeot Citroen and Renault’s dominance of the auto industry is facing an attack by a new van from Hyundai.

Hyundai has partnered with Turkish automaker Karsan to debut a large van at the Hanover truck show in September. And the cost-saving move follows Volkswagen recently shifting production of a second LCV from Germany to Poland.

These strategic manoeuvres pose significant threats to French market leaders PSA Peugeot Citroen and Renault, as their vehicles built in costly western European factories are undercut by vans made in lower-cost nations.

That poses a particular risk to French market leaders Renault and PSA Peugeot Citroen, which could now see models built in costlier western European plants, such as Peugeot’s Boxer, Citroen’s Jumper and the Renault Master, undercut by vans made in lower-cost countries.

The estimated margins on the French groups’ were about twice the 3-4% made on cars in better years preceding the 2008 financial crisis. “If LCVs were a 6-8% margin business in the past, this may deteriorate for some as the cost spread between manufacturers widens,” said Erich Hauser, an analyst at brokerage ISI Group in London.

While LCVs account for only about 10% of all European vehicle sales, they make a significantly larger contribution to profit.

In commenting on this, Renault sales chief Jerome Stoll told analysts:

“Light commercial vehicles are the category where competition is really much more fierce than before.”