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Carmakers warning from Paris show

Thursday, September 27, 2012 - 02:58

Sept.26 - Paris' auto show kicks off under the shadow of the economic gloom in Europe. Julian Satterthwaite reports

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A new Nissan car is launched in Paris with all the razzmatazz you'd expect from the industry's annual showcase. With over 100 new product launches the car world is doing a good impression of business as usual. But as the euro zone crisis drags on, and sales keep sliding, there's a dark reality under the shine. IHS Global auto analyst Carlos Da Silva says the region is uniquely problematic: SOUNDBITE: CARLOS DA SILVA, IHS GLOBAL INSIGHT, AUTO ANALYST "It's a lot of small markets and big markets put together, and that we call Europe. You cannot find a general solution in Europe. When you want to close a plant you need to go to the president of that country, go upstairs to the European Commission - it's quite complicated." Most exposed are midmarket firms such as Peugeot. Squeezed between low-cost competitors and prestige brands, they're struggling to make sales without massive discounts. Peugeot says it's burning through up to 200mln euro per month. Renault-Nissan boss Carlos Ghosn is little cheerier: (SOUNDBITE) (English) : CARLOS GHOSN, RENAULT-NISSAN CEO, SAYING: "If you've come to the conclusion that this market is going to remain tough for three to four years, probably more structural measures are gonna have to be taken by car manfucturers, each one a function of its own situation." Not everyone's losing money. Renault's own budget brand Dacia is selling well, and holding onto healthy margins despite bargain prices. Analysts say its success may be keeping the parent company afloat. At the other end of the market Jaguar-Land Rover is also enjoying record sales. It kicked off the show with the launch of two new models, and chief executive Ralf Speth says the problem now is deciding which new segments to enter: (SOUNDBITE) (English): RALF SPETH, JLR CEO, SAYING: "You know with a big product portfolio there are a lot of open development areas for Jaguar Land Rover and we test every and each one but we can't occupy every niche so we concentrate on the core elements." But there's no downplaying the tough times. Even electric vehicles and hybrids are now less hyped. Earlier this week Toyota said it now expected to sell just a handful of its latest electric cars. Even China's booming car market may be cooling off. That's bad news for prestige brands such as BMW that have seen surging sales in the country. If a slowdown really does bite, then even Germany's blue chip brands could start to hurt. The industry may be putting on a brave face in Paris. But when the curtain goes down on the show, Europe's car industry may find there is little left to celebrate. Julian Satterthwaite. Reuters.

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Carmakers warning from Paris show

Thursday, September 27, 2012 - 02:58