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Manufacturers at Frankfurt Auto Show try to shake crisis mentality

November 15, 2010

FRANKFURTAfter a year that threatened to engulf the automobile business in a bruising contraction in world trade and most Western economies, manufacturers arrived at the Frankfort Auto Show more eager to sell cars than spread apocalyptic warnings.

From compacts for the frugal to super-premium vehicles for the fabulous, the companies have new models to offer—some of them electric—and the world of auto enthusiasts is lapping them up as the industry begins to shake off the all-crisis, all-the-time attitude of the last year.

"You’re talking more about products," Carlos Ghosn, chief executive of Renault, said Sept. 15, the first day the show was open to journalists. "We are happy."

As with so much lately, the Frankfurt auto show this year is a more modest affair, with fewer companies displaying their wares across less floor space.

Instead of the 1,046 companies at the biennial show’s previous outing in 2007, there are 753 this year. That may reflect the industry’s state of mind: 12 months after the Lehman Brothers debacle, things are less bad than expected and better than could be reasonably hoped for.

Ghosn said that Renault, which controls Nissan, expected worldwide auto sales to reach 59 million units in 2009. The good news, he said, is that at the beginning of the year, he expected it to be 55 million.

"The difficult crisis in the industry is not over yet, but there are increasing signs that the bottom has been reached," said Volkswagen Chief Executive MartinWinterkorn. "The industry can be cautiously optimistic."

But the Japanese auto market has stagnated, and the European market faces a downturn late this year and early next as the cash-for-clunkers programs that accelerated 2009 sales begin to run out. Germany spent $7.3 billion on the wildly popular program, which stimulated sales of smaller, environmentally friendly cars.

The question mark hanging over European spending has not stopped automakers from introducing what they say are the products of the future. Renault showed, for the first time, an all-electric sedan based on its existing Fluence line. Ghosn also announced a partnership with RWE, a German utility, to develop the infrastructure for recharging the batteries of electric cars.

RWE’s chief executive, Jürgen Grossmann, handed Ghosn a package—and then autographed it—the size of a mailbox from a street corner. It represents, both executives said, the electric "filling station" of the future.

Burnishing its green credentials, Daimler showed off a "plug-in hybrid"—a car that can run on either electricity or gasoline, but can be recharged from the wall.

That the hybrid was a prototype version of the Mercedes S-Class suggested that no manufacturer could avoid electricity’s surge. Daimler’s chief executive, DieterZetsche, called the hybrid model "the best of green."

For those who still enjoy the smell of gasoline, Porsche showed its four-door Panamera, which made its debut in Shanghai this year.

That Porsche went first to China—a market it entered in 2001—and then came to Europe with the Panamera highlighted how much has changed since the last world economic downturn a decade ago. No executive interviewed could recall thinking so much about the potential in Asia, specifically China or India.