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Geneva car show opens amid industry gloom

Published: 03 Mar 2013 11:02 GMT+01:00

Plunging prices and over-capacity will again this year cast a shadow over the Geneva International Motor Show, which kicks off at the Palexpo exhibition centre this week, but plenty of luxury racing dreams should still be prominently on display.

The European auto industry got off to a bad start in January, when new car registrations in the European Union plummeted to their lowest level since 1990 after an already catastrophic 2012.

Only 12 million cars were sold last year -- the lowest number since 1995.

Switzerland, the host of what is one of the auto industry's biggest events, is a rare bright spot on the crisis-hit continent.

The Swiss, who do not belong to the EU, saw new car registrations jump 2.4 percent last year from an already record year in 2011, with 431,000 new registrations.

For the neighbouring EU nations, however, the end of the tunnel remains out of sight and most experts refuse to guess when, if ever, the market will come roaring back and hit its pre-crisis 2007 level of 16 million cars sold.

Stefan Bratzel, a German car industry analyst, expects to see sales across Europe slip five percent this year and predicts that the mood in Geneva will be jaded.

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

Daimler and Volkswagen raked in record net profits in 2012, and BMW looks set to do the same.

European leader VW, which saw its net profit soar 40 percent last year to €21.7 billion ($28.6 billion), pulled far ahead of the next in line, PSA Peugeot Citroen.

The French company has had a very bumpy ride and suffered a €5 billion loss last year. In July it announced the closure of its historic plant in Aulnay, near Paris.

US carmakers Ford and General Motors, who lost billions of dollars in Europe last year, also decided to shut down plants, with Ford closing sites in Belgium and Britain and GM closing an Opel plant in Germany.

"We are only just getting started on the reorganisations" in the auto industry, Fitch analyst Emmanuel Bulle cautioned.

"Suppliers, who are also suffering, will also start facing this issue," said Max Blanchet of the Roland Berger consultancy, predicting that between 40,000 and 80,000 jobs could disappear from the European car industry over the next two years.

Other carmakers, in less dire straits, have opted for a softer approach.

French Renault for instance is aiming to reach an agreement with the unions allowing salary cuts in exchange for it agreeing to keep up production in France, after it completed a similar deal in Spain.

Trailing its high-end competitors, Daimler plans to cut costs by two billion euros in its cars division by the end of 2014 in a bid to improve profitability.

Italian Fiat meanwhile is turning towards luxury car production to maintain its industrial base in Italy, and recently inaugurated a Maserati plant near Torino.

Indeed, the luxury segment continues to stubbornly resist the crisis.

As in previous years, exceptional vehicles will be at the forefront of the 83rd edition of the Geneva car show.

The most spectacular and most expensive new vehicles this year are expected to come from Bentley, McLaren, or perhaps Ferrari, with a "supercar" worth an estimated one million euros.

Both high-end and other brands have definitely been busy. No fewer than 130 European and world premiers are set to be unveiled at the show, which opens its doors to the media on Tuesday and to the public on Thursday, and runs until March 17th.

A special pavilion will be dedicated to so-called "green" cars, which will represent 10 percent of all the models on display.

While fully electric cars will hardly make the cut, low-consumption vehicles and hybrids will be prominently displayed, according to Juergen Pieper, a car analyst with Metzler bank.

The Geneva car show runs from March 7th-17th.

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