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In Geneva, carmakers see no light at end of the tunnel

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(Globalpost/GlobalPost)

The European crisis hovered like a dark cloud over the Geneva International Motor Show as it opened on Tuesday, but there was no lack of new luxury cars shining on the showroom floor.

The event, considered one of the most important car shows of the year, will nonetheless be marked by the continent's economic and debt crisis again after an already catastrophic year in 2012.

Japanese tiremaker Bridgestone for instance used the opening day to announce that it will close a plant in Italy with 950 employees owing to plunging sales.

Last year, only 12 million new cars were sold throughout the European Union -- the lowest number since 1995.

And 2013 did not begin any better. In February, new car registrations in Spain slipped by an annualised 9.8 percent, in France they fell by 12.1 percent and in Italy they plunged by 17.4 percent.

Even Germany, Western Europe's leading car market which withstood the crisis last year, has not been spared, as new car sales shrank by 10.5 percent.

"My number-one word for this (European) market is challenging," Susan Docherty, the head of Chevrolet's European division, said Tuesday.

Volkswagen head of sales Christian Klingler agreed, insisting that "the European market is still just as complicated."

And Ford, which is set to close three factories in Europe, expects the slump to continue for years.

"I don't see us getting to the 17 to 18 million units that we were running in 2007 probably for the next four to five years," the US carmaker's European chief, Stephen Odell, told reporters.

"I think we're in for a very slow recovery curve, and probably some blips," he added.

Renault's chief executive Carlos Ghosn meanwhile described the two first months of this year as "very disappointing," telling AFP that sales had fallen around nine percent.

The French company is bracing for sales to fall between three and five percent for the full year.

Daimler chief Dieter Zetsche also lamented the effects of the crisis.

"We have seen a very slow start in January. It seems that February continues at the same level," he told AFP, stressing however that the German company expected to see improvements in the second half of the year.

PSA Peugeot Citroen, which has issued forecasts as bleak as compatriot Renault, meanwhile said it expected competition to remain cut-throat in Europe's crisis-hit car market.

"There is no reason to think that the price war will subside," said its head of brands Frederic Saint-Geours.

General brands like Peugeot, Renault, Ford, Fiat and Opel are all turning to the up-and-coming small-scale SUV segment in the hope it will steer them out of the crisis terrain.

While this is still a niche market, "it will continue to grow and offer interesting margins," Saint-Geours said.

Other car companies, especially German ones, can count on their strong presence in the high-end segments to help weather the storm.

BMW chief Norbert Reithofer for instance expressed "cautious optimism", saying that the company's European sales would likely only slip two percent this year.

Daimler's Zetsche was also bordering on upbeat.

"We are still growing in a declining market," he said.

The top luxury segment, the Geneva show's main speciality, appeared oblivious to the crisis meanwhile.

McLaren, Ferrari and Lamborghini all unveiled so-called supercars to be sold for between one to three million euros ($1.3 - $3.9 million).

The auto show's 83rd edition will be reserved for the media on the first two days, but on Thursday the floodgates will open to the public until the event closes on March 17.

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http://www.globalpost.com/dispatch/news/afp/130305/geneva-carmakers-see-no-light-at-end-the-tunnel