Auto executives agree: their industry is headed into a giant storm.
The clouds of global economic turmoil cast a pall over the opening of the Paris Motor Show yesterday - although a staged display of thunder and blue lightning bolts provided a dramatic backdrop for the introduction of BMW AG's new 7 series.
General Motors Corp chief operating officer Fritz Henderson said the US hasn't seen such a slump in auto sales in two decades and predicted "chaos" if US lawmakers don't approve a US$700 billion financial bailout plan.
Ford Motor Co's CEO for Europe, John Fleming, said he is bracing for a difficult end to 2008 as declining housing markets and tightening credit take their toll.
And Carlos Ghosn, CEO of French carmaker Renault SA, said the global auto industry could remain in a funk for two years.
"We don't know if we are at the start of the end or the end of the start," he told reporters.
With rock music and clouds of dry ice, automakers unveiled smaller and more fuel-efficient cars to cater to consumers both cash-strapped and environmentally conscious. The new models are testimony that the industry is working to adapt to an era of expensive gas and mounting concerns about global warming.
Honda Motor Co unveiled a new five-door gasoline-electric hatchback to challenge rival Toyota Motor Corp's success with the hybrid Prius. Honda said its Insight would be cheaper than any other hybrid car on the market, to make the low-emission technology affordable for more consumers. The Japanese automaker aims to sell 200,000 of the cars each year, launching next spring in Japan, Europe and North America.
Renault showed off a revamped Megane compact hatchback. France's second-largest automaker, which is cutting 6,000 jobs to maintain profitability, hopes the car will make up for poor sales of the low-cost Laguna car.
And luxury car makers like Ferrari added their very own touch of glamour. The Italian automaker introduced its new California - a coupe-cabriolet with a retractable hard top - claiming that customers at the very top end of the market are immune for the moment.
"What is affecting Ferrari customers is not the financial times," CEO Amedeo Felisa said in an interview with The Associated Press.
The displays covered the entire range: fast to slow, luxury to economy. Renault displayed a Formula One racer. Peugeot showed a speedster for the Le Mans Series. Mercedes unveiled its latest armored limousine for VIPs, described as "luxuriously spacious and superbly comfortable."
Underscoring the need for green, some models had the amount of carbon dioxide they emit pasted in large numbers down their sides.
The two-week show opens to the public this Sat after two press days.
Citigroup expects 2008 to be the first year of volume declines since 2001 for the global car industry, and last month it lowered its outlook for this year and next after double-digit declines in new car registrations in western Europe, the US, and Japan.
Overall US auto sales plunged last month, dropping below one million for the first time in more than 15 years as some consumers struggled to get car loans and others stayed away from showrooms amid bank failures and Wall Street turmoil.
Sales at every major US and foreign brand fell at least 24%from the previous year, with the exception of GM, which said it sold 16% fewer vehicles, helped by its month-long offer of employee pricing for all buyers.
GM's Henderson said the company can't rule out the need for more restructuring if the economic crisis worsens and said it was "extraordinarily important" that US lawmakers pass a financial bailout to shore up confidence.
France's car market has held up, thanks to government incentives to buyers of green vehicles. The French car manufacturer's association said on Wed that new car registrations rose 8.4% in Sept from a year earlier.
Last year, France introduced rebates and surcharges to encourage sales of more environmentally friendly vehicles. Under the system, dubbed "bonus-malus," car buyers can take money off the purchase price depending on how much CO2 the vehicle emits.
Larger rebates are awarded for cars meeting stricter emissions criteria, from 200 euros (US$287) all the way up to 5,000 euros (US$7,175) for electric vehicles putting out less than 60 grams of CO2 per km.
"The French market is resisting well for the moment. I hope it will continue," Renault's Ghosn said.
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