Paris mo­tor Show

The Gulf Today - Time Out - - FEATURE -

From Brexit and transat­lantic trade ten­sions to the chal­lenges posed by China and elec­tric ve­hi­cles, ex­ec­u­tives see plenty of rea­sons to worry.

“Mak­ing fore­casts is be­com­ing more and more di­fi­cult,” BMW’s chief Har­ald Kruger told jour­nal­ists. “Proitabil­ity is ob­vi­ously un­der pres­sure.”

It was enough to keep plenty of key play­ers at home: Ford, Fi­atChrysler, Nis­san, VW and Mazda were among the no­table ab­sences at this year’s show.

Faced with the re­luc­tance of some in­dus­try giants to spend mil­lions of eu­ros on mar­ket­ing, or­gan­is­ers re­sponded by cut­ting back the show’s length to 11 days from 16.

And in a bid to at­tract crowds who can just as easily com­pare mod­els on the in­ter­net, they set up test tracks where vis­i­tors can take elec­tric scoot­ers and bikes for a spin.

The show also teamed up with CES Las Ve­gas, the huge con­sumer elec­tron­ics fair, to host dozens of tech start-ups eager to turn cars into the in­ter­net-con­nected “mo­bil­ity so­lu­tions” of to­mor­row.

But some an­a­lysts say such changes aren’t enough, cit­ing a sim­i­lar ab­sence of ma­jor car­mak­ers at the in­dus­try’s other top shows in Detroit, Geneva or Frank­furt in re­cent years.

“The con­cept needs to be re­done from scratch -- up to now th­ese shows were just for putting cars next to young girls,” said Fer­di­nand Du­den­hof­fer of Ger­many’s Cen­tre for Au­to­mo­tive Re­search.

Such mar­ket­ing costs have also be­come harder to jus­tify as car­mak­ers in­vest bil­lions in au­ton­o­mous driv­ing and elec­tric mo­tors, even as the out­look for sales dark­ens.

Du­den­hof­fer is ex­pect­ing global sales to fall 1.4 per cent next year, with de­clines of 4 per cent in the US and China.

But the more im­me­di­ate worry for Eu­ro­pean man­u­fac­tur­ers is Brexit and the pos­si­bil­ity of new du­ties be­tween Bri­tain and the con­ti­nent.

“To­day we’re in a sit­u­a­tion where ev­ery­body’s frozen, we’re all wait­ing to see what’s go­ing to hap­pen,” said Car­los Ghosn, head of the Re­nault-Nis­san-Mit­subishi al­liance.

“I don’t think that there’s any car­maker who’s not pre­pared for the worst. We don’t like it but we’re pre­pared,” he added. BMW’s Kruger said Brexit’s ef­fects were al­ready be­ing felt. “The mar­ket is shrink­ing, and we’re sell­ing fewer cars,” he said, adding that he too was brac­ing for a “di­fi­cult sit­u­a­tion”.

Yet ex­ec­u­tives still hope a last­minute break­through will avoid a “hard Brexit”, sim­i­lar to the deal reached over a re­vised Nafta fol­low­ing US Pres­i­dent Don­ald Trump’s threat to scrap the trade pact.

“Frankly, we’re very happy that we have an agree­ment. I can tell you that no agree­ment would have been much more dev­as­tat­ing for the de­vel­op­ment of our op­er­a­tions in North Amer­ica,” Ghosn said.

The threats haven’t stopped car­mak­ers from in­vest­ing: BMW “will spend more money than ever, seven bil­lion eu­ros ($8.1 bil­lion) on re­search and de­vel­op­ment this year,” mainly on elec­tric and dig­i­tal tech­nolo­gies, Kruger said.

Both BMW and its Ger­man ri­val Daim­ler have trimmed proit fore­casts for this year, not least be­cause of charges as­so­ci­ated with the “diesel­gate” emis­sions cheat­ing scan­dal.

Strict EU lim­its on CO 2 emis­sions from 2020 have con­trib­uted to plung­ing diesel sales, as has the prospect that many cities could start ban­ning their use to com­bat smog.

That has ac­cel­er­ated the shift to elec­tric, along with the prospect of sup­ply­ing the huge Chi­nese mar­ket, where ofi­cials are strongly en­cour­ag­ing the use of zero-emis­sion ve­hi­cles.

Re­nault an­nounced this week a low-cost SUV, the K-ZE, speci­ically for the Chi­nese mar­ket.

But in de­vel­oped mar­kets elec­tric cars are still a loss-mak­ing propo­si­tion.

“The amount of tech­nol­ogy on­board is go­ing to get big­ger and big­ger, and the costs higher and higher,” said PSA Group chief Car­los Tavares.

He sug­gested that de­vel­op­ing car-shar­ing sys­tems could be a way of mak­ing them more ac­ces­si­ble.

For Maxime Le­merle, an auto spe­cial­ist at the risk in­sur­ance group Euler Her­mes, the wave of chal­lenges has car­mak­ers fac­ing “stress tests” like those ap­plied to banks af­ter the 2008 inan­cial cri­sis.

“The ques­tion is whether they will be able to adapt to the deep changes in the au­to­mo­tive world,” he said.

The Re­nault EZ-Ul­timo con­cept car

The Mercedes con­cept car Vi­sion EQ Sil­ver Ar­row Below: The Re­nault EZ-Ul­timo con­cept car

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