The largest motor show on Earth opened in Paris on Thursday as the auto industry attempts to convince the world it is moving forward with an eye on the environment as well as on profit margins.
The Paris show opened Thursday for the press, but the public must wait until Saturday
The expo convened amid uncertainty in the auto industry as to how the global credit crisis will affect car sales, and as France proposed earlier this week to weaken European Union laws on the amount of carbon dioxide (CO2) cars should be allowed to emit.
With exponentially rising petrol prices, new environmental legislation and already falling sales figures, most of the major auto makers were keen to show off their latest lines of hybrids, electro-cars and fuel savers at the biennial Mondial de Paris car show.
Over 360 marquees from 25 countries are represented at the car expo, which attracted some 1.43 million people at the last show in 2006.
The Bugatti Veyron 16.4 Grand is on display in Paris
Out for public display at this year's event will be 90 new models and new green technologies from automakers such as Toyota, Honda, Nissan, General Motors, Peugeot and Citroen.
Credit crisis to crunch auto sales
But behind the veneer and marketing hype, auto executives are worried about what lies ahead for the industry, with fears the latest credit crunch could hit car sales significantly over the next two to three years.
Predictions are already dire. Economic forecaster Global Insight predicts the usually strong selling month of September could see a double-digit decline in sales figures.
"Car sales across western Europe will slump in September as consumer confidence evaporates in the face of the financial crisis, tougher credit restrictions and inflationary pressures elsewhere," Global Insight said in a report published on its Web site Wednesday.
The forecaster said the once-generous financing deals used by dealerships to tempt buyers into their lots have effectively been dried up by the credit crisis.
"The problem stems from in-house financing divisions' ability to offer loans and lease deals. As the credit crisis has all but frozen inter-bank lending, the ability to package and re-sell the resultant consumer loans has left the system paralyzed," it said.
France seeks more CO2 leeway
Environmental groups on Wednesday reacted with outrage to the French proposal to weaken planned European Union laws on CO2 car emissions.
French President Nicolas Sarkozy's government's counter-proposal will ease the burden for carmakers
On Thursday the European Parliament's environment committee voted through a version of a law originally proposed by the EU's executive, the European Commission, demanding that cars sold in the EU emit no more than 120 grams of CO2 per kilometer (g/km) by 2012.
Penalties for non-compliance should rise to 95 euros ($135.80) per g/km for each car sold over the limit by 2015, and the EU should bring in a target of at least 95 g/km by 2020, the committee said.
But the French government's proposal calls for a fine of no more than 80 euros per g/km over the limit and a long-range target "in the range 95-110 g/km."
Moreover, it declares that the law should only apply to the most efficient 60 percent of Europe's new auto fleet when it comes into force in 2012, with the least efficient cars only coming into the system in 2015.
The proposal, which would need the backing of the EU's member states and the European Parliament, is now likely to set up a heated political battle as lobbyists on both sides push for a deal before the parliament's next plenary session on Oct. 20-23.
Green groups angered
The French government, which currently holds the EU's rotating presidency, "is giving up any pretence of trying to limit the climate impact of cars," Greenpeace said in a statement Wednesday.
The proposal, presented to diplomats Tuesday, "totally ignores" the European Parliament vote and shows that France is "totally out of touch with the needs of citizens who are desperate to reduce their fuel bills,” a spokesman for Brussels-based group Transport and Environment told news agency DPA.