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Geneva Motor Show to make tracks out of crisis

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Published : 2014-03-03 20:14
Updated : 2014-03-03 20:14

PARIS (AFP) ― The Geneva Motor Show will kick off this week on an optimistic note as the long-suffering European car market appears to finally have swerved out of the slow lane.

Luxurious sports cars, high-end SUVs and city cars will be bumper-to-bumper at the show ― one of the auto industry’s biggest and most diverse events ― as it cruises out from under the long shadow of industry crisis.

Carmakers and analysts alike say the worst of the difficulties are now in the rear-view mirror.

“The worst of the crisis is over, so the mood should be good,” Juergen Pieper, a car industry analyst with German bank Metzler, told AFP.
Protective covers sit over Opel automobiles during preparations ahead of the 84th Geneva International Motor Show in Geneva, Switzerland, Sunday. (Bloomberg)

New car registrations in the European Union slipped just 1.7 percent last year, to 11.8 million cars sold, after five years of far more brutal falls.

But sales are finally expected to pick up this year, according to German car industry analyst Stefan Bratzel.

By how much remains to be seen: the most cautious observers expect sales to remain flat while the most optimistic are gearing up for three-percent market growth.

“The markets fell really low, so obviously they will have to start picking up at some point,” EY analyst Jean-Francois Belorgey said, adding that northern Europe was doing better than the south of the continent.

France remained a dark spot on the European map, seeing car sales in 2013 fall to their lowest level in 15 years with little prospect of growth this year, while Italy also touched rock-bottom, selling just 1.3 million cars.

“The economic fundamentals in France and Italy remain fragile,” Belorgey acknowledged.

And despite the expected upturn this year, Europe’s car industry remains plagued by overcapacity and profitability issues for mid-range carmakers, according to credit insurance and analysis group Euler Hermes, pointing to several recent factory closings, at PSA, Opel and Ford.

German carmakers, who sell heavily in North America and Asia where sales ― especially at the high end ― are up, are meanwhile doing quite well.

Their international presence allows them to counter still sluggish sales in Europe and keep their factories running at full-tilt.

Volkswagen raked in a net profit of 9.1 billion euros ($12.6 billion) last year, while Daimler, which owns Mercedes-Benz and Smart among others, posted a record net profit of 8.7 billion euros.

And the German manufacturers are aiming for even better traction with a range of new products, including the Volkswagen’s third generation Audi TT and a new BMW compact.

France’s Renault and Italy’s Fiat have seen far more modest profits, while PSA Peugeot Citroen suffered a 2.3 billion-euro loss last year, although it hopes a cash injection from the French state and China’s Dongfeng will put it on the road to recovery.

Despite their continued hardship, French carmakers should play a more central role at this year’s Geneva Motor Show, where smaller city cars are expected to get more attention than previously.

“They are presenting a number of important new products,” Pieper said, listing for instance Renault’s launch of a new Twingo, which will face off against the Citroen C1 and Peugeot 108.

Such small, punchy city vehicles will as always have to battle for attention with exceptional, luxury cars at the 84th edition of the Geneva car show.

While the show will not feature last year’s overwhelming display of extravagant machines priced over the million dollar mark, there will still be plenty to see for car enthusiasts.

Ferrari’s new version of its California T sport car and Lamborghini’s new Huracan, both priced at round 200,000 euros, will likely draw crowds.

But perhaps the most popular attraction at this year’s show, set to open to the public from March 6-16, will be something in between: super trendy SUVs and crossovers.

Porsche, once known only as a sport car maker, will for instance speed into the mid-size SUV range with its new Macan, in the hope it will prove as popular as its big sister Cayenne, which accounts for more than half of the carmakers sales.

American carmaker Ford is meanwhile revving up to unveil a third installment of its hugely popular compact Focus ― the world’s most sold model.

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