Despite shrinking market volumes in western Europe and the USA, European coachbuilders this year expect to increase production and revenue from last year’s total of approximately 250,000 units and €6.5 billion, Automotive News Europe reported.

Progressively fragmenting markets are offering new opportunities to coachbuilders – companies that build low-volume production vehicles for other car makers – but the sector is facing a number of challenges.

Profitability is at record low levels, less than 1% of revenue. Carmakers are taking production in-house on niche vehicles previously built by coachbuilders. Darwinian competition between coachbuilders is pushing new contract profit margins to razor-thin levels.

This year Matra of France went out of business. Matra invented the first European minivan, the Renault Espace, but lost the contract to manufacture it for a fourth generation. Matra was left with only one model in production, the Renault Avantime, and that was cancelled this spring for its low sales.

Similarly, Valment of Finland remains with only one contract, supplementary production of Boxters for Porsche. It lost the new Saab 9-3 convertible, which went to Magna Steyr of Austria.

Likewise, Carrozzeria Bertone of Italy remains with the Opel-Vauxhall coupe and cabriolet only. The new Astra coupe-cabriolet is likely to be manufactured in-house by Opel-Vauxhall, just as Peugeot does with the 306 CC and Renault with the Megane. Volkswagen will do the same with the next-generation Golf convertible.

Heuliez of France was saved from an uncertain future when it won the contract to make the virtual successor to the Opel-Vauxhall Tigra, a coupe-cabriolet set to appear next year.

While many coachbuilders are suffering, others are enjoying new prosperity. Karmann of Germany plans to build 60,000 units this year, well above the 44,000 units it made in 2002. The gain is mainly from adding the Chrysler Crossfire and an additional 5,000 units of the Audi A4 Cabriolet.

Thanks to the addition of the Ford StreetKa, Industrie Pininfarina of Italy plans to return this year to 40,000 units of production, after slumping to 27,000 last year.

But the clear winner is Magna Steyr of Austria. After building 92,000 units in 2002, up 26% on 2001, this year Magna added the new Saab 9-3 convertible. In 2004, Magna will add the X3, the first BMW vehicle not built in a BMW factory.

After buying DaimlerChrysler’s Eurostar plant in Graz last year, Magna Steyr has an assembly capacity of approximately 200,000 units a year, which the company claims makes it the largest car manufacturer in the world without its own brand.