With eye on China

Carmakers head to Frankfurt for IAA

GMT 10:03 2015 Friday ,11 September

Arab Today, arab today Carmakers head to Frankfurt for IAA

World's largest exhibition, IAA
Frankfurt - Arab Today

Eco-friendly models and futuristic technology like automated driving look set to dazzle at the IAA auto show in Frankfurt next week, although slowing sales in China could cast a shadow over resurgent demand in Europe, analysts said.

Hundreds of thousands of visitors are expected to crowd into the massive exhibition halls of Frankfurt's sprawling trade fair from September 19-27 to catch a glimpse of the latest models and high-tech innovations.

The world's press will get a two-day sneak preview starting Tuesday of the International Motor Show, which is held every two years, alternating with the car show in Paris.

The organisers, the German carmakers' association VDA, said the 2015 show promised 210 world premieres and an "amazing display of innovations" from 1,100 exhibitors from 39 countries, in a space the size of 33 football pitches.

"The atmosphere promises to be excellent, with lots of new products and new ideas," said EY analyst Peter Fuss.

In the mass-market class dominated by Volkswagen's Golf, Renault's Megane 4 and Opel's Astra 5 will both be vying for attention. The French carmaker will unveil a new version of its Talisman, while German top-of-the-range maker Audi will present the next generation of its A4.

But it will be the urban 4x4s, the market's darlings, that are likely to steal consumers' hearts, with Volkswagen and Ford presenting more affordable models such as their Tiguan and Edge, while Jaguar will show off its luxury F-Pace and Bentley its ultra-exclusive Bentayga.

For those opposed to the fuel-guzzlers, there are more ecologically-minded models -- particularly interesting for drivers in Europe, which already has the most stringent transport CO2 emission goals in the world and could see them tightened at the COP21 summit in Paris in December.

Toyota has chosen Frankfurt to lift the veil on the fourth generation of its flagship hybrid, Prius. BMW will also present a series combining both electric and petrol engines.

Another key focus at this year's IAA will be exciting new technologies such as automated driving, said Elmar Kades, auto specialist at AlixPartners.

For the first time, around 30,000 square metres (32,300 square feet) of exhibition floor space will be given over to new forms of mobility, from the connected to the self-driving car.

- Brighter outlook in Europe -

When the last IAA was held in 2013, the market had hit rock-bottom after five years of crisis, with car sales slumping from 16 million to just 12 million units.

Carmakers reacted by restructuring their operations and shifting their production away from Western Europe to emerging markets.

But following these bleak years for Europe, the stage appears to be set this year for a rebound in demand, with new registrations in the region rising 8.2 percent in the first six months.

The European Automobile Manufacturers' Association ACEA is pencilling in growth of around five percent for the whole year.

Nevertheless, "carmakers will no doubt err on the side of caution" at the IAA in view of the slowdown in emerging markets, said Ferdinand Dudenhoeffer, an auto industry expert at the University of Duisburg-Essen.

After years of double-digit expansion that turned it into the world's biggest car market, China has seen a brutal slowdown this year, with growth projected to reach up to only three percent, or even a meagre 1.4 percent, according to market consultants IHS.

"Slower volume growth, added to ferocious competition, means lower margins and lower profitability," and that poses "a big challenge, particularly for German makers which have benefitted greatly from growth on the Chinese market," said Flavien Neuvy, auto expert at Observatoire Cetelem.

German giant Volkswagen, which looks set to overtake Toyota as the world's biggest car-maker this year, generates 36 percent of its sales in China, compared with 35 percent for General Motors.

But foreign joint ventures in China have lost ground to wholly-owned Chinese makers, whose products are frequently cheaper.

"It was an Eldorado. It will be less so. but when you look at the rate of car ownership, there is no cause for concern about the future of the Chinese market," said Yann Lacroix of Euler Hermes.
Source: AFP

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