While the champagne flowed and skimpily clad beauties draped themselves over the metal, leaders of major vehicle manufacturers stepped up to podiums to put a gloss on an industry in deep trouble.
Company officials told the worlds press this week that, yes, sales were much stronger than last year and the reception for the new Imperial Easyglide was the best ever.
Car sales in Europe this year were indeed much stronger than last year - up by between five and six per cent. But industry analysts said that around one third of this was due to various government incentive schemes to persuade reluctant buyers to part with old, smokey clunkers. They said that another third has been generated by unusually generous price cuts and discounts, and the rest was genuine demand from the public. Real demand was a paltry two per cent.
Yes, volumes are up five or six pct, but operating performance has been going down hill. The companies are selling more cars and making less and less from each unit. They are selling more cars but they having to give away more to move the metal, said Colin Whitbread, consultant with Londons Economist Intelligence Unit. John Lawson, European automotive analyst with Londons Salomon Brothers, agreed: What we have is profitless growth. In terms of sales we have increased volumes but no profits as a result for most car manufactures.
And the outlook for 1997 and 1998 was not encouraging for car makers, although the downward pressure on prices would continue to delight consumers.
Lawson agreed that underlying growth had been artificially stimulated by incentives and discounting. He believes there is some hope for improvement, but not much.
97 and 98 could be a little better, the underlying economics for consumers might be more consistent with a rising market, Lawson said.
The EIUs Whitbread was less hopeful: Demand has been artificially stimulated. The big companies are having to spend a lot on marketing costs, much more than the same time last year.
(Profit) expectations for next year are being progressively downgraded, said Whitbread, after announcing the EIUs revised profit forecasts for Europes car makers.
Of Europes big six mass car manufacturers, Frances Renault gave most cause for concern, according to Whitbread.
Whitbread said Renault was losing a lot of money, mainly because of its high cost base in France, and was losing market share across Europe.
Fiat of Italy, despite a formidable series of impressive and successful new cars, was close to losing money in Europe, dragged down by a supine home market. Fiats Brazilian operation is keeping car operations in the black, Whitbread said.
Peugeot of France, which said last month its first-half net profit was halved by price wars throughout Europe, had a better cost structure than Renault, and has had more success with new models like the 406 large family car, Whitbread said.
Germanys Volkswagen, volume leader in Europe with its Audi, Seat and Skoda brands, had shown some signs of profit recovery, but from a low base.
Of the US volume car makers operating in Europe, Ford was in the black, but faced hefty launch costs for its new little Ka, unveiled at the show this week, and for the facelifted Mondeo.
General Motors Europe, which sells Opels and Vauxhalls, appeared to be profitable, Whitbread said. The General Motors Corp subsidiary said it is the lowest cost producer in Europe. But it was GM Europe chairman Richard Donnelly who spelled out the stark problem facing the industry.
Theres so much extra capacity, thats the fundemental thing. Theres 16 million units of capacity and a 12-1/2 million market so obviously some companies have been really aggressive to try to keep some semblance of high utilisation in their plants, Donnelly said.
