The world's auto industry that meets this week at the International Motor Show (IAA) is counting on innovation and new models to stand out amidst fierce competition and pressure to preserve the environment.
Major carmakers are battling weaker sales in western Europe and to a lesser extent the United States, and are hobbled by high costs for raw materials, high petrol prices, and price wars that have cut their profit margins.
New car sales stagnated in Europe in the first half of the year, slipping by 0.2 percent compared with the same period in 2006 to 8.5 million registrations in 28 countries polled by the Association of European Automobile Manufacturers (ACEA).
Renault and DaimlerChrysler were the hardest hit, though Fiat and Toyota reported higher sales.
Fitch analyst Emmanuel Bulle said the first half was “a little better than expected” but colder weather typically means slower sales later in the year.
Most western European countries, with the exception of Britain and Italy, said the market had softened, but things looked better in eastern Europe, which saw sales climb by 15 percent in the first six months of the year.
Even higher increases were seen in the Baltic states, Poland and Romania.
“The market is being driven by emerging economies, which makes it essential to be there with increased production and more modern products,” said Philippe Barrier, an analyst at Societe Generale.
The Frankfurt show, which is held in alternating years with the one in Paris, was therefore placed under the sign of “responsibility,” he added.
The IAA has set “sustainable mobility” as its theme, alongside the slogan: “See What Will Move Your Future.”
According to Barrier: “We are not chasing a dream, we are going to make a practical purchase.”
Automakers, he added, “are not looking for volume at any price, they are taking stock of the market.”
Several carmakers will present new models at the auto fair, including Renault with its latest Laguna, Peugeot with the 408 and Opel with the Agila.
Audi is to show a new A4 saloon, and fresh four-wheel-drive offerings include the Volkswagen Tiguan and Ford Kuga.
Questions about responsibility for global warming will be high on the agenda however, with CO2 emissions a hot topic in light of European Commission efforts to cut average levels from new cars sharply from 2012.
In general, automakers have sought to get more performance out of smaller engines, and are also expected to show a range of hybrid and biofuel vehicles as European firms try to catch up with Toyota, the clear leader in hybrid cars.
“Tangible progress has been made, with reduced (petrol) consumption on the order of 10-15 percent,” Barrier said.
“The presentations indicate that automakers are ready to make an effort.”
Peugeot Citroen has announced a petrol-electricity engine … for 2010, and will present a 308 HDi hybrid car at this year's show.
It opens to the public on Thursday in the presence of German Chancellor Angela Merkel.
