FRANKFURT, 9 September 2003 — The world’s carmakers converge on Frankfurt this week for the prestigious biannual IAA motor show, at which they hope a whole fleet of brand new models will help jump-start stalled demand in the European car market. The Frankfurt show, the biggest in the world in terms of exhibitor numbers and floor space, takes place every two years.
And its 60th edition, which runs from Sept. 11 to 21, is being closely watched because cash-strapped automakers are showcasing as many as 60 new models against the backdrop of a continuing slide in worldwide demand.
European companies, and German makers in particular, have invested heavily in freshing up their classic lines in the hope of luring customers back into the showrooms. BMW, for example, is to unveil a new small four-wheel drive and a new version of its top-of-the-range Six Series.
Rival DaimlerChrysler is presenting a new four-door version of its Smart super mini, and industry analysts are also likely to pay close attention to the launch of the new Opel Astra and its upmarket rival, Volkswagen’s fifth-generation Golf. Demand for cars in Europe certainly needs a shot in the arm.
Burdened largely by the strong euro, which makes European goods more expensive than rival products made in other regions, and sluggish domestic demand, new car sales in Europe skidded 2.9 percent in 2002. And they fell by a further 2.6 percent in the first six months of the current year, recent data published by the European automobile makers’ association ACEA showed.
Recently, there have been some tentative signs of stabilization — sales in June alone were actually higher on a 12-month basis and new registrations in July also rose. But industry experts and analysts nevertheless remain wary about the remainder of the year.
Renault chief Louis Schweitzer recently reiterated his forecast that the European car market would shrink by three-to-four percent for the whole of 2003. And demand would begin to pick up only slowly again next year, with the market expected to grow by just one-to-two percent in 2004, Schweitzer said on a recent trip to Turkey.
US carmaker Ford, which had earlier said it would scale back production in Europe in the second half of this to meet falling demand, recently announced output would not be trimmed as drastically as first thought. “The situation on the car market has improved,” a spokesman for Ford Europe said.
To help stimulate sales, carmakers, particularly in the US, have engaged in fierce price wars, a tactic that European companies, already burdened by the strong euro, are more reluctant to adopt.
“Discounts are growing gradually in Europe, but it’s not a phenomenon I see getting out of control,” or even reaching the same scale as in the US, said Renault’s Schweitzer.
Toyota was to announce new models and sales targets later yesterday for the opening of the Frankfurt show, highlighting the increasingly aggressive stance by Asian car manufacturers in Europe. Asian automakers, which have been gaining ground in the United States, have European consumers next in their sights, and Toyota will unveil its plans in Frankfurt.
For the first time in 46 years, the US sales of leading Japanese automaker Toyota outstripped those of American rival Chrysler in August. And Japanese and South Korean manufacturers have high ambitions for the European market, where they are steadily increasing their market share with a regular flow of new models to woo consumers.
