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Last Updated: Monday, 1 March, 2004, 08:58 GMT
Car industry seeks refuge in Geneva
BY Jorn Madslien
BBC News Online business reporter in Geneva

Geneva motor show

Geneva's motor show - now 99 years old - throws its doors open to the motoring media on Tuesday for a preview of the automotive future.

Car journalists and camera crews will filter into industrial halls, illuminated by giant spotlights and filled with glitzy cars, as if they were entering Toyland.

But sadly, like the flushed face of an eager schoolboy at a Friday night disco, the shiny facade is more a sign of desperation than of glorious things to come.

The European car industry is under attack on several fronts, and its executives hiding behind polished car bodies look like very frightened knights in exceptionally shining armour.

Besieged

But there is nowhere for them to hide.

CO2 emission reduction
EU target: 120 grammes per kilometre by 2005, and by 2010 at the latest.
Industry response: The target is unrealistic, we need more time.
"Volumes are not good, pricing is looking dodgy and competition is fierce," said Patrice Solaro, analyst with Kepler Equities.

Swiss mountain air does nothing to offer respite from the stubbornly weak demand for cars.

Car sales in Europe fell 1.6% in January as European drivers, spooked by war and economic uncertainty, continued to respond slowly to price cuts and incentives which further erode car makers' profits.

And not even neutral Switzerland can protect the industry from the strength of the euro which makes it harder for them to compete with non-European car makers.

Asian car makers enjoyed a 20% sales surge in Europe during the otherwise depressed month of January.

Rising costs

Rather than attract new buyers, the car makers' lower prices have raised consumer expectations of a price war that they hope will produce even better deals for those prepared to wait.

Queuing motorway traffic   PA
Reducing car emissions is very expensive
Such optimism could prove unfounded.

Last week, the association of European car makers, ACEA, warned that forthcoming EU regulation could push up the price of every European car by 5,000 euros (3,330; $6,270) in a decade.

The industry's outcry was a frustrated response to the European Commission's recent decision to stick to its targets for CO2 emission cuts despite vociferous opposition from car makers.

Lobbying

Last month, a delegation of European automotive executives - including Volkswagen's Bernd Pischetsrieder, Renault's Louis Schweitzer, Fiat's Giuseppe Morchio and Ford's Sir Nick Scheele - travelled to Brussels to meet both the president and the vice president of the Commission, Romani Prodi and Loyola De Palacio.

But despite such high level meetings, little progress is being made by the industry which wants less red tape and, more importantly, more time to implement emission cuts.

The automotive executives are having to tread carefully.

Urging laxer controls is tricky given that current emission reduction targets are voluntary.

Their biggest worry would be if impatient Commissioners might hit back by legislating.

But there is hope for the car makers yet.

Given that the automotive industry accounts for 4% of the European Union's gross domestic product and employs thousands of people, the Commission has a vested interest in helping secure the sector's health.


SEE ALSO:
Cars risk Europe's climate cuts
02 Dec 03  |  Science/Nature


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