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News Analysis: Where is the way out of European economic crisis for car-makers?

GENEVA, March 7 (Xinhua) — The 83rd Geneva Motor Show opened its door to the public Thursday at Palexpo. Some 260 manufacturers from 30 countries will present 900 models of vehicles, among which more than 130 will make their world or European debut.

However, the show, which is expected to attract more than 700,000 visitors, was overshadowed by the general fear that car sales will remain low five years after the financial crisis started.

A SHRINKING EUROPEAN MARKET

Statistics showed that only 12 million cars were sold in the 27-member European Union in 2012, the lowest number registered since 1995. And no change can be expected in the new year, according to most car producers.

At the Geneva show, leaders from major automobile manufacturers played down the prospect of car sales in Europe in 2013.

Philippe Varin, Chairman of the Managing Board at PSA Peugeot Citroen, said that the European automobile market had shrunk by 25 percent in the past five years and another three to five percent drop was expected for 2013.

James Muir, President and CEO of SEAT, told Xinhua that Spain, where the company is based, had been in a recession for five years already and he did’t see any gradual recovery yet.

Chevrolet Europe President Susan Docherty also admitted that “2013 is going to be a difficult year.”

“But this business that we are in has always been cyclical, we’ve had good years, we’ve had bad years, and I think as leaders of car companies, we have to know how to manage through tough times,” she said.

TECHNICAL INNOVATION, GREENER CARS

Manufacturers agreed that new products, especially those with better fuel economy, lower CO2 emission, are one of the best solutions to boost the sales and regain the heart of consumers.

More than 30 manufacturers brought some 90 models of green cars, powered by alternative technologies or with less than 100g/km CO2 emissions, to the show, accounting for 10 percent of the vehicles on display.

The Chevrolet Spark electric vehicle made its European premiere in Geneva. Docherty said as Europe will implement more stringent rules on CO2 emissions in 2020, electric vehicles will become more important.

Muir said SEAT, which belongs to the Volkswagen group, will benefit from the technological advance by the group, which is strongly emphasizing on alternative fuel and electric technology vehicles.

“we are planning to take advantage of the group’s technologies and to move forward in the direction of plug-in cars,” he said.

However, Muir said favorable taxation policies should be introduced by governments more widely as an incentive for consumers to buy new energy cars, and alternative fuel companies should collaborate with government to enhance infrastructure construction.

Manufacturers also move to the small SUV segment to give European consumers more options. At this year’s show, many brands, such as Chevrolet, Renault, Ford and Honda, presented their small crossover SUV.

“It is just right-sized for Europe, it will be easy to park, the fuel economy will be terrific … so we think we are launching the right car at the right time,” commented Docherty on Chevrolet’s Trax.

HEADING TO EMERGING MARKET

Although the crisis continues to weigh on the European car industry, it seems to be diminishing a bit in the United States and Asia, as well as other emerging markets.

As some German brands, such as Volkeswagen, BMW, shrug off the downturn in Europe thanks to their strong presence in the international market, other car makers has also started to go global.

Muir believed that strong exports, together with new products, would help SEAT step out of the shadow and it has been evaluating the idea of producing locally in China.

The sales outside Europe took up 33 percent of its total sales for PSA Peugeot Citroen in 2011, the proportion increased to 38 percent last year and now the company planned to achieve 50 percent in 2015, according to Varin.

Varin said that all the models will be internationalized from now on and China will play a more important role in the company’s overseas market.

He said that new products sold in China will be adapted to the taste and demand of Chinese customers, and more cooperation will be carried out between PSA Peugeot Citroen and its Chinese partners, Chang’an and Dongfeng, in terms of both production and sales.

 

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