In the centre of Europe, the world’s car makers are gathered for Geneva’s annual motor show. But behind the promotional glitz and the shiny vehicles lined up in the giant exhibition halls the industry is facing an uncertain future. Many manufacturers are talking to each other about possible strategic alliances. Co-operation over production and development is increasing: Ford making engines with PSA Peugeot Citroen; Fiat having done deals with Ford, PSA, Suzuki and India’s Tata and DaimlerChrysler seeking a buyer or partner for its Smart small car division.
Analysts say that the full scale acquisitions and mega-mergers of the late 1990s have been replaced by selective alliances and partnerships. That enables companies to maintain flexibility in the face of fierce competition, which is essential as profit margins are squeezed ever tighter, particularly on the smaller cars that Europeans tend to prefer. Geneva, which opens to the public later this week, is particularly important for the European car makers. It is the only major European show held annually and the one that kicks off the spring selling season.