Paris motor Show
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