The world’s carmakers are aiming to charm thrifty European motorists at next week’s Geneva car show and kick-start a long-awaited recovery in the region, Reuters reported.
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But as manufacturers increasingly trim prices and offer profit-eroding incentives to nurture faltering demand, they must also reassure investors and industry analysts in the Swiss lakeside city they are not sacrificing margins to prop up sales, the report noted.
“The mood is likely to be cautious,” Commerzbank analyst Robert Ashton told Reuters, adding: “There are worries over European sales volumes and now concerns about pricing are growing too.”
The news agency noted that most carmakers are boasting that a string of new models will lure buyers back into European showrooms and power growth this year, with Germany’s car giants alone launching an unprecedented 57 new models, according to the country’s auto association.
The report said that many of the key new money spinners have already been unveiled [e.g. Volkswagen’s Golf and GM Europe’s Opel Astra medium-size hatchbacks; new minivans from Ford and Renault; new city cars from Fiat] or are set to stay under wraps until later this year. But industry experts are reportedly keen for a glimpse of Renault’s new mini multipurpose vehicle – the concept version of a new car based on its small and curvy Clio, Reuters added.
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By GlobalDataThe news agency said Opel will trumpet the imminent arrival of its fully redesigned Astra, first shown last September in Frankfurt and due to go on sale in March, its direct challenge to Volkswagen’s [also fully redesigned] and more expensive Golf [launched last October in Germany and just released in the UK].
France’s PSA Peugeot Citroen will also be centre-stage as it seeks to revive a dowdy lineup and flagging sales with its revamped 407 large saloon, Reuters said.
Meanwhile Italy’s Fiat, pumping out new crowd-pleasers to return to profit after tumbling deep into crisis over the last two years [the new Panda city car and Idea ‘mini-minivan’], will show off the Trepiuno, a new concept version of its most famous brand, the tiny Cinquecento [it looks like a modern-day update of the 1950s-designed 500].
Fiat Auto’s new chief executive Herbert Demel will also make his first official appearance at the show, Reuters noted.
Industry commentators have already observed that Demel’s first motor show press conference since joining Fiat is expected to be well attended as he reviews the progress of Fiat Auto’s restructuring and announces his plans for the future.
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Peugeot will show new Chinese-built 307 saloon |
Reuters noted that carmakers can launch new models till they are blue in the face and still make little money without a pickup in demand, which was shaken in Europe last year by the war in Iraq, weak economic growth and poor consumer confidence.
Car sales in the region dipped 1.6% in January, dashing hopes for a quick recovery this year, and some executives predict only flat or slightly brighter sales in 2004 in western Europe, which has lagged the improving US market, the report added.
According to the report, the car industry accounts for four percent of the European Union’s gross domestic product and reflects the wider economy and in particular consumer confidence. More worrying than sales figures was news that Europe’s biggest carmaker Volkswagen was already offering incentives on its recently launched new Golf range, which sent shudders through the sector and cranked up fears over a potential US-style price war that could stymie profit growth.
“It’s not full-on panic, but there’s definitely a lot of concern,” Kepler Equities analyst Patrice Solaro told Reuters, adding: “Volumes are not good, pricing is looking dodgy and competition is fierce.”
Reuters said that the European DJ Stoxx Autos Index has fallen 2.3% so far this year, making it one of the worst-performing sectors and well behind a 5.7% gain on the wider market.
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Fiat Trepiuno concept will be unveiled at Geneva next month |
And, as if shaky demand and pricing pressure was not enough, European carmakers must also contend with fierce competition from Japanese rivals, who are chipping away at the market with well-priced cars adapted for local tastes, the report noted.
Reuters added that Japanese and Korean carmakers – led by Toyota – boosted sales by around 20% in January and are keen to keep seizing market share by cracking the all-important European diesel market.
However, the report noted, European firms are likely to hit back at Geneva by trumpeting plans to expand further afield into high-growth markets such as eastern Europe and China, as they aim to keep sales rising amid tougher competition in their largely saturated home markets.
For example, Reuters added, PSA will be showing a new sedan version of its top-selling 307 which will be built and sold in China, as Europe’s second-biggest carmaker aims to double capacity in the world’s fastest growing major car market by 2006.
