 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paris Car Show 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SPECTACULAR ARRAY OF NEW CARS AT PARIS SHOW INDUSTRY LEADERS, IGNORE ECONOMICS, CLAIM GREAT PROSPECTS Porsche Cayenne, Renault Megane, BMW Z4 fail ascetic tests for some |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paris - All’s right with the world inside the Paris Car Show. There are spectacular new cars to suit most pockets. Sexy models shamelessly drape themselves over the gleaming new metal as though the feminism movement never existed. Industry leaders are making speeches about how well they are doing, and how well they are going to do. Unfortunately, in the real world outside the Paris Expo exhibition centre close to the Porte de Versailles, things are rather different. Apart from the constant and unbelievable traffic jams on the section of the Peripherique which serves the car show, in the wider European economy there are ominous signs of slowdown. Forecasts for car sales in Europe this year are being slashed. Expectations for 2003 are stagnant at best. The International Monetary Fund has warned about tottering European economic growth. But you won’t notice any reticence about the future from Europe’s car manufacturers who have presented an unprecedented array of gleaming new cars. PORSCHE’S FIRST SUV International debutants in Paris were led by Porsche with the Cayenne, the German sports car maker’s first move into the Sport Utility Vehicle (SUV) market. Other cars under the spotlight for the first time included the BMW X4 roadster. Luxury car manufacturers Audi and Jaguar introduced new top-of-the-range saloons. More downmarket new models taking a bow for the first time included the Renault Megane, a medium sized family car competing against the class-leading VW Golf, the flexible little Citroen Pluriel, and the supermini Nissan Micra. Ford displayed its affordable little StreetKa convertible, and its Focus compact MPV concept. Honda whipped the dust covers away from its new Accord. Opel unveiled its Meriva mini MPV, which it hopes will carry on the success of the bigger Opel Zafira seven-seater compact MPV. Volkswagen also showed its first SUV – the Touareg – jointly developed with the Porsche Cayenne. INDUSTRY CONFIDENCE Listening to the leaders of car companies like BMW, VW, and Peugeot making speeches at the Paris Car Show, you’d be forgiven for thinking that the car business was on the threshold of unprecedented good times. But the prospects for business in Europe are worrying to say the least. The outlook for the German economy, Europe’s largest, is clouded by media reports that the recently re-elected Red-Green coalition led by Chancellor Gerhard Schroeder, plans broad tax increases which could cripple an already sclerotic economy. Horrendous automotive production over-capacity, at around 30 per cent, is a problem still to be tackled effectively. And if that isn’t enough negatives, the industry has to face new problems handed to it by Brussels. The European Union decided this summer to change the rules which had exempted the car business from anti-monopoly regulations – the so-called Block Exemption. The new rules, which gradually loosen carmakers grip on sales, take effect from October 2002. Analysts expect these new rules will force prices, already under pressure from intense competition, to fall towards the industry average across Europe. Companies like VW and Opel in Germany and Renault and Peugeot in France, which traditionally sell vehicles at a premium in their home markets, will be especially hard-it. This spells trouble for an industry already existing on wafer-thin profit margins, and which was recently labelled a structural value- destroyer for investors in Europe and the U.S. by investment banker Deutsche Bank. WORLD’S FASTEST SUV Porsche can be exempted from talk about wafer-thin profits, and its new Cayenne is expected to bring big benefits to the bottom line. The Cayenne will initially be offered in two versions – the Cayenne S with a 4.5 litre V8 producing 340 bhp and which reaches 0-62 mph in 7.2 seconds, and the Cayenne Turbo twin-turbo V8 which produces 450 bhp and blasts to 60 mph in 5.6 seconds. German motoring magazines have been quick to label the Cayenne the world’s fastest SUV. With all the hype surrounding the Cayenne you would think it would be a candidate for unofficial “Star of the Show”, but although the SUV is sold out for the next two years, it has been criticised as too ugly, and not sleek enough to match the Porsche tradition. This is unlikely to worry a company which thrived during a period when its sports cars were known as the “Bathtub Porsche”. FLAME SURFACING The BMW Z4 two-seater roadster, which replaces the smaller Z3, has also attracted criticism because of its “flame surfacing” styling from daring designer Chris Bangle. The Z4, with annual sales likely to approach 40,000 according to analysts, is too small to make a major difference to profits. But BMW investors worry that the styling for the new BMW 5 car, expected in 2003, might also be controversial, and jeopardise the 30 per cent of group profits generated by the 5 series. So the Z4 is unlikely to get unanimous “Star of the Show” votes. Step forward the Jaguar XJ. Jaguar, owned by Ford, said the XJ uses lightweight aluminium and is about 40% lighter than conventional steel construction. The car is available with a choice of four engines – a 4.2 litre supercharged V8, a normally aspirated 4.2 V8, a new 3.5 litre V8, and a 3.0 litre V6 engine. Self-levelling air suspension is standard across the range. The new XJ’s design hasn’t deviated much from the previous model, although it is slightly longer, taller and wider than its predecessor. “Star of the show”? Certainly. VISUALLY CHALLENGED Renault has spent 2.1 billion euros developing the Megane II and is counting on a big success in this medium sized family car sector, or C segment, led by the VW Golf and Peugeot 307. But the Megane II has also attracted criticism that it is “visually challenged” because of its styling. According to investment banker Schroder Salomon Smith Barney, this could be fatal for the project. “Its styling is likely to divide opinion with its vertical rear-end and protruding boot similar to the (upmarket Renault) Avantime and tapered front-end similar to the (Renault) Vel Satis. “Futuristic” styling may be appropriate for Renault’s large cars given consumer apathy towards Renault historically in this area, but there are doubts as to whether this is appropriate for C-segment cars where family buyers are predominant,” SSSB said in a report. The all-conquering Megane Scenic compact MPV will also face tough new competition from a new Ford Focus five-seater on display in Paris, and the new VW Touran. The Citroen Pluriel is said to be three cars in one. Body panels can be moved around to provide a saloon, a convertible and a “panoramique”’ with a glass roof. The little Nissan Micra, looking a bit like a VW Beetle because of its headlight design, will also provide the underpinnings of its affiliate Renault’s upcoming Clio replacement. GERMAN WORRIES All these new cars will be competing for sales in a market likely to get tougher, and smaller, according to investment bankers. Deutsche Bank expects west European sales to dive 4 per cent in 2002, and to fall again by 2.3 per cent in 2003 to 13.9 million. Merrill Lynch sees a 5 per cent fall in 2002, and worries about weakness in Germany. “However it is possible, given recent floods in Germany and an uncertain economic environment, that an already depressed level of consumer confidence will weaken further,” Merrill Lynch analyst Stephen Reitman said in a recent report. Commerzbank sees a 5.1 per cent decline in 2002, but a slight upturn in 2003. If that is not enough to signal that European car manufacturers might be talking up their prospects in the face of contrary evidence, the IMF had some chilling forecasts on September 25. The IMF, worried by increasing uncertainty in the global economy, slashed its 2002 growth forecast for the 12-nation Eurozone to just 0.9 per cent from a previous forecast of 1.4 per cent, and cut next year’s outlook to 2.3 per cent growth from 2.9 per cent. The IMF also criticised Germany with thinly veiled comment that Europe was failing to deal with inflexible labour markets. But Europe’s car industry leaders were putting on a brave face. Ford of Europe Chairman and CEO David Thursfield told a TV audience from the stand at the Paris show that prospects for the company were just fine, but yes, sales in Europe have peaked and will be pretty flat for the next two or three years. The Paris car show opened to the public on September 28 until October 13. Neil Winton – September 27, 2002
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
