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 Speaking as the Paris auto show opened to the media on Thursday,
Daimler chief executive Dieter Zetsche said he now expected the
global car market to grow by 3-4 percent this year, down from a
previous forecast of 4-5 percent.
Other executives shared his caution, particularly over Europe where
a six-year sales slump has left demand around 20 percent below
pre-crisis levels and sluggish economies have put a question mark
over whether the gap will close anytime soon.
"Perhaps we will arrive at 13 million or 13.5 million (overall
vehicle sales in Europe). But the market won't return to (the
pre-crisis level of) 15.5 million, I'm sure of it," Martin
Winterkorn, the chief executive of Europe's biggest carmaker
Volkswagen <VOWG_p.DE>, said on the eve of the show.
Europe's car market has returned to growth this year, although
widespread incentives for buyers and government subsidy schemes in
some countries have made it difficult to gauge the strength of
underlying demand.
A source familiar with the matter told Reuters that car sales in
Germany rose by more than 5 percent in September, bouncing back from
a decline in August and giving a year-to-date increase of 2.9
percent.
But demand has been erratic and executives are particularly
concerned about Russia -- once tipped to overtake Germany as
Europe's largest auto market -- where new car sales tumbled 26
percent year-on-year in August due to a slowing economy hit by
Western sanctions over the crisis in Ukraine.
"Earlier this year, momentum was at the upper end of expectations
but it's flattening out a bit," Ford Europe <F.N> Chief Executive
Stephen Odell told reporters, referring to the broader European
market.
BMW <BMWG.DE> Chief Executive Norbert Reithofer, meanwhile, said
price levels in Europe had improved, but not by as much as the
German carmaker's managers would have liked.
He forecast it would take more than three years for the European
market to return to pre-crisis levels.
LONG-TERM VIEW
Despite their concerns, some executives said they were keeping faith
with the Russian market, and in some cases sticking to sales
forecasts.
"The Russian market will come back. One has to think in longer
terms," Volkswagen's Winterkorn said. "It's right, we cut production
(temporarily in September at the Kaluga plant) but Russia will come
back, I'm convinced of that."
Toyota <7203.T> also said it expected to ride out the worst of the
slump in Russia's car market, and stuck to its goal of increasing
sales to a million vehicles in Europe next year.
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Didier Leroy, the Japanese carmaker's head of European operations,
said that while sales of entry-level cars in Russia were down 25-30
percent, hurting many of its competitors, demand for premium
vehicles was down a more modest 8 percent. Vehicles such as its
Camry and Lexus have helped Toyota to boost its share of the
declining Russian market by about 1 percent this year, he added.
With carmakers scrapping for market share across Europe, the Paris
show is packed with new fuel-efficient small cars and compact SUVs
designed to tap into stronger performing segments of the market.
Among the new models in Paris is Renault's <RENA.PA> revamp of the
elderly Espace people carrier as a crossover sport utility vehicle.
It was launched on Thursday 30 years after the first model was
unleashed on European consumers who hadn't yet realized they wanted
one. Once the European market leader, the Espace is now one of the
laggards of its category, far behind the Ford S-Max, which struck
out in a sportier direction from its 2006 introduction and is
unveiling another timely update in Paris.
"It's a global shift affecting even family vehicles, and it is here
to stay," Societe Generale analyst Philippe Barrier said. "Designers
are having to compromise as people look for something sportier."
Daimler's Zetsche said growth was also slowing in emerging markets
such as Brazil and Argentina. But he played down fears of a sharp
slowdown in China, the world's biggest car market.
"Growth has slowed, but from a much broader base," he said. "We must
not forget that it is the second largest economy. We see
double-digit growth this year."
(Additional reporting by Agnieszka Flak and Andreas Cremer; Writing
by David Goodman and Mark Potter; Editing by Keith Weir)
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