Paris car show opens amid financial gloom

The world's biggest car show opened to the press on Thursday in Paris, with 362 marques from 25 countries represented. The glamour of the event was, however, dampened by the gloomy prospects of the industry amidst the financial crisis.


The world's biggest car show opened on Thursday in Paris, but the razzmatazz was largely overshadowed by grim economic storm clouds looming over the industry.

In all, 362 marques from 25 countries are represented at the Mondial de Paris, a biennial car carnival, which attracted 1.43 million people on its last outing in 2006.

This year, however, in the conference areas behind the stands advertising 90 new models and a raft of new green technologies, auto executives are faced with a gloomy economic outlook.

Rising petrol prices, new environmental legislation and falling sales figures were already a concern when the event was in the planning stage.

Now the credit crunch could drain what fuel was left in the industry's tank.

Business analysts Global Insight, in a report published on their website Wednesday, warned that tougher credit restrictions could see European car sales in September drop by a fifth.

"The combination has left September with annual selling rates heading towards levels last seen during the early 1990s recession," the analysis said.

Manufacturers have responded with a bright array of new models, particularly smaller cars designed to attract drivers concerned by high fuel prices and pollution.

Toyota will premiere three new cars in Paris: the new Avensis saloon, a scaled down off-roader called the Urban Cruiser and the tiny iQ micro-car.

The Japanese giant's local competitors will also be present in force.

Honda will unveil its Insight hybrid, designed to compete with Toyota's market-leading Prius as an eco-conscious family saloon, and Nissan its the all-electric concept car, the Nuvu.

From the United States, General Motors will for the first time show Europe the Volt, the electric motor driven wonder that the world's former number one hopes will revive its fortunes.

German manufacturers, long known for their fuel-hungry luxury behemoths, will respond to the Brussels environmental regulators breathing down their necks with a range of compact 4x4s.

French twins Peugeot and Citroen will also enter the diesel-electric hybrid market with the Prologue and the Hypnos.

Renault's equivalent is still at the concept car stage, dubbed the Ondelios.

The traditional petrol-driven market will also be well served.

At the mass market end of the spectrum motorists will be introduced to the umpteenth new version of Volkswagen's 34-year-old Golf hatchback, while fans of the rare and expensive will meet the all new Ferrari California.

Nevertheless, analysts admit the industry is far from optimistic about 2009.

"Launching new models in this context is not ideal," noted Mark Fulthorpe of CSM Worldwide.

Oil prices have begun to decline from historic highs since the world economy started to cool, leading some to hope for a boost in sales.

But just as the industry was drawing its breath, the credit crunch triggered by the US banking crisis stifled the once generous financing deals used to tempt buyers onto garage forecourts.

Bertrand Ratko, an expert at industry marketing experts RL Polk, said he did not expect sales to pick up any time soon, probably not before 2010.

"No-one is very optimistic and everyone is lowering their forecasts," he said.

The Paris motor show opened Thursday for the press and industry reps. From Saturday until October 19 it will be open to the public.

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