Munich hosts its first IAA motor show

It is indeed a new start in several respects. For one, the International Motor Show (IAA) is the first major trade show in Germany to throw open its gates to the public since the start of the COVID-19 pandemic.

It offers a glimmer of hope for the hard-hit trade show industry, which has been left nursing an economic loss of over €40 billion ($47 billion) due to canceled events during the pandemic, according to the Association of the German Trade Fair Industry (AUMA).

On the other hand, it is a new beginning for the IAA itself. After half a century in Berlin and after almost seven decades in Frankfurt, the premier German motor show has now found a new home in Munich.

That's not all: After an underwhelming IAA in Frankfurt two years ago, the show's organizer, the German Association of the Automotive Industry (VDA), had promised an overhaul. However, with the classic auto shows struggling to stay relevant and because the "pure display of sheet metal is no longer enough" — as auto expert Peter Fuss from EY consultancy puts it — the IAA is daring to experiment.

Hybrid trade fair … but with a difference

The event asks the question "What will move us next?" — and answers it with an assortment of mobility options. The car is just one piece of the puzzle. The event will feature electric scooters and bicycles, as well as trams, buses and autonomous vehicles, underscoring that personal mobility options such as e-scooters and bicycles are as much a part of the mix as cars, buses and self-driving vehicles.

The IAA Mobility will be a hybrid trade show, but not in the sense that has become the norm during the pandemic, one where attendees can join in-person or virtually. The motor show is being organized both on the exhibition grounds, where product presentations and trade conferences will be held, and at popular squares in downtown Munich. The two parts are connected by a 12-kilometer (7.5-mile) Blue Lane, which doubles up as a lane for test drives.

The experiment is not without risk. Auto expert Ferdinand Dudenhöffer takes a skeptical view of the "trade show that doesn't want to be one," as he wrote in his preview. He rues the absence of a clear focus on the car. "If the car is no longer the focus, then the auto show — once the world's largest — loses its meaning."

A pale shadow of past glory

This is already apparent. Apart from the three major German manufacturers (VW, BMW and Mercedes-Benz), only Hyundai, Renault-Dacia and a few newcomers from China are taking part in the show. The likes of Toyota, Stellantis (which owns brands like Chrysler, Fiat and Opel) and General Motors have graciously declined. Tesla has never been to an IAA anyway, but Volvo, Ferrari and Rolls-Royce have also given it a pass this year.

Even the German car majors only have a modest presence relative to their often grandiose appearances at past IAAs in Frankfurt. And whether it is going to boost the popularity of the new IAA that Volkswagen is exhibiting mostly on the trade fair grounds, while Mercedes-Benz is using the open space in front of the historic Feldherrnhalle, will become clear in the coming days.

Yet the auto industry — and this brings us to another new start — is doing quite well right now despite the pandemic, a shortage of semiconductors and supply chain bottlenecks.

According to the latest figures from the consulting firm EY, the global automotive industry has never earned as much money operationally as it did in the first half of 2021. The 16 largest auto companies generated operating profits of €71.5 billion compared with a loss of about €4 billion in the same period last year. One of the reasons: Due to the dramatic shortage of computer chips, manufacturers are currently prioritizing the production of high-margin models, and thus earning big bucks.

Chancellor is coming, so are the demonstrators

But the automakers urgently need this money as they undergo a major transformation. In view of climate change, many countries have announced plans to phase out combustion engines. The European Union, for example, has proposed to effectively ban the sale of internal combustion engine vehicles from 2035.

As a result, global carmakers, including those in Germany, are turning their focus toward electric vehicles. At the same time, they must also invest in new operating systems for their "smartphones on four wheels" in order to catch up with Tesla. In this way, the car could be integrated into various mobility concepts, including those where owning a car is not a priority.

It is precisely this mobility puzzle that the IAA will try to showcase in Munich. The event is unlikely to attract anywhere close to the 500,000 visitors that descended on the Frankfurt fairgrounds two years ago. In the best of times, up to a million people pushed their way through the halls at the Frankfurt Motor Show.

In any case, Angela Merkel will be among the visitors. Germany's outgoing chancellor will open the show on Tuesday, and plenty of critics of the auto industry will also make their presence felt.

Various bicycle rallies and blockades are planned, similar to demonstrations seen in Frankfurt in 2019. The protests, which sometimes turned violent, were among the factors that contributed to the IAA ditching the German banking metropolis. But Frankfurt now has a new trade fair: Starting in 2022, the Eurobike bicycle trade show will be held there. Perhaps a sign of times to come.

The article has been adapted from the original German