Frankfurt IAA Show Offers Signs of Hope for Automakers

Frankfurt IAA Show Offers Signs of Hope for Automakers

"In Europe, the automobile sector has effectively reached bottom," said Alan Mulally, the head of Ford.

FRANKFURT - The world's automobile makers are counting on the IAA auto show, which opens in Frankfurt this week, to give the sector a boost as recovery signs are becoming increasingly discernible in Europe.

Held in Frankfurt every two years in alternation with the Paris Motor Show, the IAA opens its doors initially to trade professionals on Thursday and then to the wider public two days later and runs until Sept. 22.

And experts say that after years of decline, automobile sales are stabilizing and may even begin to rise again after next year.

The European market has "bottomed out and is stabilizing,” said Christoph Stuermer, analyst at IHS Automotive.

His colleagues at consultants PwC similarly believe that the long years of blood-letting will come to an end in the second half of 2013.

In fact, the latest EU-wide data for July actually show a rise in new car registrations in July.

Stabilizing sales "are a positive sign," agreed Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch-Gladbach.

"But the recovery will be slow," he cautioned.

"It will be years yet, if at all, before we can return to the levels seen in 2007," when European auto sales amounted to a record 16 million vehicles, he said.

Upturn in Western Europe

In the seven months to July, a total 7.19 million new cars were registered in Europe.

Industry experts differ over the extent and magnitude of the upturn that is expected to materialize in western Europe.

While analysts at PwC are penciling in a rise from 12.1 million cars in 2013 to 14.9 million in 2019, AlixPartners are much more pessimistic and are predicting stagnant sales in the region until 2019.

Nevertheless, some of the automakers themselves say they are beginning to see light at the end of the tunnel.

The head of Ford (IW 500/8), for example, Alan Mulally, said that "in Europe, the automobile sector has effectively reached bottom." And while he concedes there is still overcapacity in the sector, Ford has adjusted to demand, Mulally says.

PSA (IW 1000/55) was hit particularly hard by the crisis in Europe and like Ford and Opel (the German arm of General Motors (IW 500/5)), slashed jobs and shut down factories in response. But its chief Philippe Varin recently said that PSA would start winning back market share in its home market by the end of this year.

In addition to burgeoning sentiment in Europe, sales in China and the United States are robust, auguring well for the global car market, which is expected to grow 3.2% in 2013 and 4.8% in 2014, according to analysts at Moody's rating agency.

As a result, "automakers should be sending out slightly more positive signals at the IAA," said Euler Hermes analyst Yann Lacroix.

"I believe the mood among automakers will be rather good at the IAA," said Stuermer at IHS.

Sights at the Show

For the IAA's 65th edition, carmakers, especially German ones, will be unveiling electric or hybrid models, with BMW (IW 1000/37) to unveil its first fully electric car, the i3, as well as a rechargeable hydrid i8 sports car.

Volkswagen (IW 1000/7) will show off its zero-emission e-Up! and the e-Golf.

French manufacturers will be there with the concept car Citroen Cactus, the new Peugeot 308 or the Dacia Duster redesigned by Renault. And Italy's Fiat will present the new seven-seater version of its 500.

Sports car enthusiasts will be able to see the Lamborghini Gallardo LP570-4 Squadra Corse, a limited series with 570 horse-power, or the Porsche 918 Spyder with close to 900 horse-power under its bonnet.

Another focus at this year's show will be the connected car, which is capable of communicating with other cars and with the outside world.

With about 1,000 exhibitors attending this year's IAA, Chancellor Angela Merkel will officially inaugurate the show Thursday, just 10 days before general elections where she is seeking a third term as Germany's leader.

Estelle Peard, AFP

Copyright Agence France-Presse, 2013

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