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European Carmakers To Get Serious At Geneva Show

Volkswagen, which is expected to unveil a new GTI model in Geneva, has benefited from Germany's more flexible labor laws, which have helped it keep costs lower and continually push innovation. In addition to the rise in profits, the carmaker saw sales jump 21 percent last year.

Carlos Ghosn, head of the Renault-Nissan alliance, has hailed a new partnership with Mercedes as a way to address overcapacity, but said it all comes back to negotiating more flexible terms with workers. The carmaker is planning to eliminate 7,500 jobs in France over the next three years, mostly through attrition.

"It's a win-win relationship, which allows us to increase the utilization rate at Renault's factories, while keeping our partners from investing in new production capacity," he told Le Monde in a recent interview.

Ghosn and his competitor CEO Philippe Varin of PSA will be using Geneva to persuade the press and their customers that 2013 represents a new beginning.

But as Laurent Petizon, an analyst with Alix Partners, stresses, if manufacturers are going to make a new start once the current economic and industrial downturns begin to ease, they have to learn the lessons of overcapacity and inflexibility.

"The crisis is an opportunity to reform the industry once and for all," he said. "There will be growth, maybe in two years. But to capture it, you have to be healthy!"

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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