The Geneva motor show opened its doors yesterday to global media without any notable absentees from the roll call of the world’s carmakers, in contrast to January’s Detroit show when several big names were AWOL.
Go deeper with GlobalData
Smaller stands, notably at General Motors’ European subsidiary Opel, were an obvious sign of the times though it was much easier to move around with fewer companies flying in guest journalists.
Against this background of business – almost as usual – there were some stark messages. Opel will run out of money next month and one couldn’t help but think this might be the last time one or two automakers are seen at Geneva, or any future motor show.
As Joe Greenwell, president of the UK trade group SMMT, said before the doors opened: “The industry finds itself in a dark place and in a crisis not of its making. It needs help.”
But while Greenwell stopped short of saying the UK government was dragging its heels on aid, he added: “But we need help yesterday.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe SMMT met with business secretary Lord Mandelson almost five months ago to put forward a set of proposals to stimulate demand.
Greenwell said: “These are along similar lines to those taken on board by other European Union member states. The SMMT has put a good case and the government has listened.
“There is a lot of frustration that we have not had anything concrete back as demand has come down. Meanwhile UK manufacturers have taken some serious action to right-size the industry while still investing in technology.”
Greenwell said the SMMT had been working in conjunction with the Retail Motor Industry Federation and the Fleet Leasing Association in its discussions with the government.
“We followed up with a meeting on 28 January and we have tried to be reasonably patient. But we were very direct with regard to the rate of progress and we are aware of how bureaucracy can slow down momentum. We are pressing for an urgent response and we need a result fast.”
Discussions, he said, have centred around finance and scrappage schemes. “[Industry minister Lord Peter] Mandelson is making the right noises and we feel he is sympathetic, particularly in terms of the industry investing in technology.
“Other [EU] states have acted quickly. I think the UK could have acted faster. We have had something on loan guarantees and training but it has not been large amounts. I like to think the government now has all the information it needs to make decisions.”
Greenwell is keen on the scrappage schemes introduced first in Germany and France and more recently in Italy. In Germany showroom traffic increased considerably in the first six weeks of the year and industry optimists are already predicting the scheme will add six figure numbers to the projected year end sales tally – reports yesterday said February sales were up about 20%.
Greenwell said: “All the indications from Germany and France are that scrappage schemes are working and can stimulate demand and we would certainly welcome anything that stimulates demand. The signals we are getting for the first few months of this year in terms of new car sales are pretty much the same as they were in the last few months of 2008.”
Another to support scrappage schemes is Peter Wyhinny, director of Seat UK, who believes that by targeting technology, although important, the government is focusing on the wrong area.
Consumer activity is needed to help dealers clear stock and so kick start manufacturing and protect jobs, both on the retail and the manufacturing side of the industry.
“Scrappage is working in Germany and it’s a win-win situation for governments and the industry”, he said. “You get rid of older, more polluting cars and get manufacturing going again.”
Ken Keir, managing director of Honda UK, who noted he expects the total UK market to be 1.6m this year with no recovery until 2011, said: “I am not sure if stimulus packages aimed at kick starting the market can help. It is consumer confidence that is the problem. We need to change the mindset of people to encourage them to spend money again.
“I would like to see some sort of government-backed customer support to create confidence.”
Greenwell said that stimulating demand is the priority. “Then we can get people back to work.”
Has the government been dragging its feet introducing measures to kick-start sales? “To be honest there is not a lot the government can do apart from remove obstacles such as allowing vehicle finance companies to access the funds which have been made available to banks. In terms of the industry there is a will to do something and the government recognises there is a need but the processes and red tape in the middle seems to slow it all down.”
Andy Goss, managing director of Porsche GB, said: “Since the turn of the year I am less pessimistic than I was. The business environment seems to have stabilised and, with the activity levels building at dealers, I expect to see an upturn in business over the spring period.
“We do have new products coming through, following the 911 last year there is next generation Boxster and Cayman while we have a much-needed diesel option for the Cayenne. From January onwards we have seen a rise in customer interest and I am slightly optimistic. I don’t want to make any rash predictions but I have a strong idea of where we might end up at the end of the year even though the UK market generally is down 30% in the first two months.”
There is one thing that everyone agrees on: new product will be vital when the crisis ends, whether that is later this year as some predict, next year or even in 2011.
And there was no shortage of new product with Geneva playing host to some 85 world or European new model launches.
It proves that the industry knows how to fight for its life even if there will be casualties on the way.
