By SARAH DiLORENZO
PARIS (AP) â¿¿ The Geneva Motor Show has long had a reputation as one of the glitziest stops on the global auto show circuit â¿¿ the place to unveil luxury models and out-of-this-world fantasy concept cars. But this year the dire state of the European auto industry will hang over the exhibition halls. Hit by fleeing customers, struggling economies and idle production lines, the region's carmakers need to make tough decisions if they are going to survive.
Paul Newton, an analyst at HIS Automotive, an industry consulting firm, says no broad themes have emerged ahead of this week's show and no landmark unveilings are expected â¿¿ a sign of the industry's malaise and uncertainty. He argues that European automakers need deep restructuring â¿¿ not just a set of flashy new wheels.
"The Koreans are taking customers from somewhere. And it would appear that these guys are taking customers from the mass-market, established European players," said Newton.While the European financial crisis has sent unemployment soaring and led to a sustained fall in overall retail sales across the region, Europe's auto companies were struggling even before the global financial crisis hit in 2008. They have long had far more factory floor space and employees than they need to produce the number of cars they can reasonably expect to sell. This is reflected in the poor results of the Geneva Motor Show's European exhibitors: Last year, Fiat's profit fell 73 percent, while Renault's dropped 15 percent. PSA Peugeot Citroen posted a record â¿¬5 billion ($6.5 billion) loss. Of the major European auto groups, only Volkswagen is thriving â¿¿ profit rose 41 percent in 2012, although that was less than expected. Meanwhile in the U.S., both General Motors, which will be debuting a convertible Corvette at the show, and Ford recorded healthy â¿¿ but reduced â¿¿ profits as strong sales in the U.S. covered losses in Europe.