Optimism at auto show

The markets might be jittery and the economy might look bleak, but optimism reigns at the 64th International Motor Show (IAA) in Frankfurt.

German Chancellor Angela Merkel opened the show on Thursday, extolling the car manufacturers' efforts to innovate and develop new technologies. "The auto industry is and will remain the central pillar of our economy," she said.

After her opening address, Merkel toured the hall, checking out some of the newest prototypeson offer. She reiterated the government's goal of getting a million electric cars on the streets by 2020. "If you work hard, and we work hard, we can do it," she said.

Managers agree that the industry is in transition, and that the car is being reinvented.

It's just a five-minute drive from the stock exchange in downtown Frankfurt to the IAA exhibition grounds. But while stock traders are tearing their hair out at the turmoil on the markets, there's a party atmosphere in the car-filled exhibition halls. The managers of leading automobile-makers are in a celebratory mood.

Re-discovering confidence

It's hardly surprising. Their order books are full and their factories, particularly in Germany, are working at full capacity. That's some achievement, considering that the latest crisis was only two years ago - and economic storm clouds are brewing again.

Dieter Zetsche, head of one of the industry's leading firms Daimler, has yet to see any signs of impending doom. "We have excellent order figures all round the world," he told Deutsche Welle. "And we're confident that we will see growth next year too."

Not that he's blissfully unaware of what is happening in the markets - he just thinks it's high time they re-discovered their confidence. Zetsche is also hoping that Europe's political leaders will provide clear signals and to solve the crisis in the eurozone.

Keep on moving

But there is some fear that the auto industry will catch the virus that has affected the markets and begin to falter again. That's why Daimler subsidiary Mercedes-Benz is introducing new models now, including an electric Smart car and a new B-Class, to keep ahead of its rivals

US carmaker Ford is also concerned that the hard-won recovery of the last few years could fall victim to the latest economic downturn. Ford's boss in Germany, Bernhard Mattes, says that one or two markets are already feeling the pinch. "But on the other hand there are other markets, like Russia and Turkey, where demand is growing substantially," he added.

Mattes says Ford is generally upbeat, mainly because there are many new products and technologies in the pipeline. "We're very satisfied with the development. We're holding our own in Europe and our market share is growing in Germany," he said. "So we're looking optimistically into the future."

Revolution at BMW

Declarations of optimism are not particularly new at the IAA. What is new is the revolutionary rhetoric being flaunted by many CEOs. When BMW boss Norbert Reithofer introduced his company's new range of models, he declared: "In this phase of transition to sustainable mobility we need both evolution and revolution."

The new BMWi series is meant to be the leading example of this modus operandi in action. "Emission-free driving, new construction materials and sustainable production. Sustainable creation of value without depleting resources - that is a revolution," said Reithofer.

The major car companies are thinking big. BMW wants to set a new record by selling 1.6 million cars this year. Volkswagen subsidiary Audi, meanwhile, is aiming to overtake Mercedes and sell 1.3 million cars. Chinese customers are expected to account for 300,000 of these alone.

"Opel is back!"

Of all the major German players, Opel experienced the most turbulence during the recent crisis. But the company announced its return at the IAA in Frankfurt. The company says it is on track to break even this year and should start making a profit again in 2012. CEO Karl-Friedrich Stracke said he was presenting the "the newest fleet of products that we ever had in the history of Opel."

Opel sold significantly more cars in the first half of 2011 compared to the year before and has expanded its market share. "This motor show, where we're putting four new products on the market, will give us a real push. Opel is back!" Stracke told Deutsche Welle.

VW thinks big with a small car

Germany's biggest carmaker Volkswagen is devoting its presence at the IAA to a new small car. The Up series is meant to offer consumers affordable city vehicles in the hugely successful tradition of the Beetle and the Golf. VW's development boss Ulrich Hackenberg could be seen as the father of this "new small family."

The two-door model will be the first on the market starting November, with basic versions available for less than 10,000 euros ($13,600). A four-door model will follow at the start of next year. "We will also offer alternative fuel options, including natural gas," said Hackenberg. "In 2013 the completely electric E-Up will come out. I think that will send a clear signal."

Clear signals is what the IAA is all about. The organizers are expecting over 800,000 visitors in the next few days. It looks like cars are as fascinating as ever, regardless of what the economy is doing.

Author: Henrik Böhme, Frankfurt / bk
Editor: Sam Edmonds