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Paris car show tarnished by sales
PARIS, France -- European car sales may be falling but carmakers attending the region's biggest motor show plan to launch vehicles that they hope will rejuvenate the market. But it is the top end of the market that is expected to pull in the crowds at the biennial Paris motor show, which begins this week. BMW will unwrap its Z4 sports car, Porsche's sport utility Cayenne will make its debut and Ford will take the covers of its powerful Jaguar XJ. The luxury market continues to show buoyancy even as the global economy struggles to regain its feet. Car sales are expected to fall between 4 and 5 percent this year, after slipping 4.5 percent in the first six months. It is the mass-market producers who have seen a decline in sales and profits. However, many have tightened their belts by cutting costs and sharing technology to fight the downturn that has enabled them to beat analysts forecast. New car registrations for western Europe declined sharply in August as consumer confidence weakened across the continent. Volkswagen, Europe's biggest carmaker, continues to lose market share to PSA Peugeot-Citroen.
Sales at Renault, France's second-largest carmaker, have been falling over the last few months as it phases out its old Megane. The new version will be unveiled at the Paris show, running from Thursday through to October 13.
It is a crucial period for Renault. It has put more than 2 billion euros into developing the mid-size Megane, with its bowed rear window and protruding boot. Analysts are concerned the Megane has too many added extras and safety features that could weigh on the balance sheet. "If the Megane does not break new ground, added competition from VW, Ford and GM [all with new... cars in 2004] could combine to make margins [the percentage difference between costs and sales] to recover to a more tepid figure with little cash generation," investment bank Morgan Stanley said in a recent note. "While we would envisage some improvement, it is still early days and risk adjusted to the upside appears limited." Italy's struggling Fiat will try to revive its fading fortune with the Stilo estate. Ford takes the cover's of its 3-door Fiesta and minicar Streetka while General Motors hopes to tap a new segment with its Meriva mini multi-purpose vehicle, to compete with Ford's Fusion. (Full story) BMW's racey new Z4 roadster -- the successor to a retro Z3, which was famously premiered by Pierce Brosnan as James Bond on the big screen -- could be the show's biggest crowd puller. However, its ability to enhance BMW's brand will be the main significance of the bigger and more modern-looking Z4, as its planned annual sales volume of around 40,000 units does not make it an earnings driver on the scale of the new 5-saloon series, expected next summer. In the sports utility segment, in which many of Europe's automakers have failed to make much headway, Porsche will showcase its Cayenne and Volkswagen will take the wraps off its long-awaited Touareg.
The Touareg is named after a people in the Sahara famed for their ability to adapt to difficult conditions. The vehicle represents a further strategic push upmarket as well as a foray into a new segment Other options for the super rich eyeing new large saloons -- or sedans -- include the Audi A8 and Phaeton from the VW stable, DaimlerChrysler's Maybach limousine, and the powerful Jaguar XJ from Ford's Premier Automotive Group. Some industry experts predict there are too many competing models in the super-luxury segment, especially if the economic situation deteriorates and a military conflict in Iraq develops.
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