Carmakers try to electrify Geneva motor show despite gloomy ‘green’ rules, Brexit and trade war

The Geneva Motor Show kicks off this week with carmakers eager to show off new electric models, even as they nervously eye a horizon coloured by trade wars and Brexit uncertainty.

After years of growth and record profits, the sector took a sharp U-turn in mid-2018 amid an unexpected slowdown in China, which is by far the world’s biggest market, counting one out of three registered cars on the planet.

With just over three weeks to go before Britain is supposed to leave the European Union on March 29, carmakers are bracing for the possibility of a “no-deal Brexit”, which is expected to spell cataclysm for the industry.

The carmakers heading for Europe’s biggest annual car show, which opens on March 7, are suffering from the ongoing trade war between Washington and Beijing and wary about increased tariffs the US might slap on European imports.

Carmakers are also being pushed to pump huge investments into electrifying their fleets because of the EU’s controversial CO2 emissions standards.

Manufacturers of cars and auto equipment “will see slim profits in 2019”, said Ferdinand Dudenhoeffer, who heads the Centre for Automotive Research (CAR) in Germany.

“We can already expect profit warnings, production reductions and job cuts,” he said. “This is not a good climate for a show filled with glitz and glamour.”

After a one-percent drop last year, he predicted the global car market would slip two per cent in 2019 to 81.9 million individual cars sold – 3 million fewer than 2017.

As a result, factories were struggling, with overcapacity estimated at “well above 5 million units”.

“The good times that we have known for the past decade are behind us,” agreed Flavien Neuvy, head of the Observatoire Cetelem, which conducts economic surveys in the global car industry.

Carmakers, he said, are at high risk of being hit with heavy fines in Europe from next year, when strict emissions limits will require a company’s entire fleet to emit no more than 95 grams (3.4 ounces) of CO2 on average per vehicle.

These targets, he said, are “almost impossible to keep”.

A recent study by the BCG consultancy estimated that each car maker stands to be hit with between €500 million and €1 billion (US$570 million to US$1.1 billion) in fines.

“They will really need to sell a lot of electric vehicles to limit the damage,” Neuvy said.

At the same time, people are still drawn to gas-guzzling four-wheel drives, which account for one in three vehicles sold.

The models going on show in Geneva reflect industry concerns, with a wide range of concept electric vehicles on display from middle-class carmakers like Citroen and Honda, which will present their visions of a more battery-powered future.

At the same time, high-end brands like Aston Martin, Audi and Mercedes will be showing off concept electric four-wheel drives.

They are scrambling to catch up with Californian electric carmaker Tesla, which will not be at the show, but will weigh heavily on everyone’s mind at a time when its Model 3 – already a bestseller in the US – is revving up in Europe.

French carmakers Renault and Peugeot will present the latest reincarnations of popular city cars like the Clio and the Peugeot 208, with the latter available for the first time in an electric version.

Despite the constraints, the Geneva show remains a draw for luxury automobile enthusiasts and is unlikely to disappoint in terms of glitz and glamour.

Bentley will present its new Bentayga Speed, which has been categorised as the fastest four-wheel drive in the world, capable of reaching 306km/h (190mph).

Lamborghini’s new sleek Huracan Evo Spyder and Porsche’s 911 are also expected to turn heads, as is Ferrari’s F8 Tributo, with its powerful 720-horsepower engine.