Motor show defies economic gloom

By Jorn Madslien Business reporter, BBC News

Some major carmakers are staying away from the show

The car industry is gathering at the motor show in London this week to wow an audience subdued by a series of economic showers that are threatening to whip up a perfect storm.

Falling house prices, coupled with soaring food and fuel prices as well as rising taxes and charges for drivers, have already resulted in a fall in car sales, down 6.1% last month when compared with June 2007.

"This slowdown is not unexpected, but signals an increasingly tough retail environment," predicts Paul Everitt, chief executive of the car industry body SMMT.

The carmakers are bracing themselves for worse to come by preparing to defend or even grow their market shares, rather than by targeting overall sales growth.

At the London show, the mantra will be low emissions.

There will be a dedicated electric vehicle village, and several carmakers will display cars emitting less than the 140g/km target that the industry set itself a decade ago.

Large cars suffer

Yet, away from the show, the shift towards less polluting cars has been slow.

Average emissions in the UK have fallen from 190g/km of CO2 in 1998 - but only to 165g/km in 2007.

"Some manufacturers have delivered on their promise but the vast majority have to raise their game significantly," says industry observer Jay Nagley of Spyder Automotive and joint founder of cleangreencars.co.uk.

And it seems they are being forced to do so, not only by new regulation but also by consumers.

Sales of cars emitting more than 200g/km, such as models made by Porsche, Jeep or Land Rover, have fallen sharply so far this year, in some cases by more than 50%.

"As fuel prices rocket and the new car market falters, car makers with the highest emissions are being punished by the consumer," observes Mr Nagley.

Consumers downsize

Meanwhile, carmakers that are already making small cars that emit relatively low levels of CO2 hope their fuel-efficient models will help insulate them against an economic downturn.

Top UK car producers, 2007 Nissan - 353,718 Toyota - 277,825 Honda - 237,772 Mini - 237,709 Land Rover - 232,584 Source: SMMT

This is not entirely because they expect consumers to make green choices, but also because ever more drivers are chasing better fuel economy.

Some dealers report a rise in the number of sports utility vehicles (SUVs) or cars with large, thirsty engines being traded in for smaller cars.

"You can find some amazing deals on these cars at the moment because everyone wants small cars to keep petrol bills down," says Matt Tumbridge, of usedcarexpert.co.uk, taking a different line on the phenomenon.

Genuine debuts?

But if the British consumer is deserting the car industry, it seems the reverse is also true - at least partly, with a number of high-profile names shunning the show.

Looking through a list of exhibitors ahead of the show, and there is no sign of the high-end carmakers Rolls-Royce, Porsche, Ferrari or Aston Martin.

Even more mainstream car companies such as Audi, BMW and Volvo appear to be staying away.

But many of the major car manufacturers will be there.

The five leading UK carmakers - Nissan, Toyota, Honda, Mini and Land Rover - are all exhibiting, as are the UK market leaders Ford and Vauxhall.

And auto firms from Japan, France and the US will also turn up in strong numbers.

The show organisers insist there will be some 23 global debuts in London - though whether that is actually the case depends largely on the definition of a debut.

Most of the models on the list are either concept cars or new versions of existing cars, such as the Bentley Continental Flying Spur Speed, the Nissan Qashqai+2, the Ford Focus RS and the Range Rover Autobiography.

But Vauxhall's Vectra-replacement, the Insignia - which will go head-to-head with Ford's Mondeo - is genuinely new.

And for the petrol heads that will no doubt be flocking to the show, there is also some eye candy in the form of the Lotus Project Eagle, a �45,000 British-built sports car.

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