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IAA car show displays industry in throes of reinvention

Automakers descended on Frankfurt Tuesday, ready to show off their latest innovations at the glitzy International Motor Show (IAA) even as the spectre of tough new environmental rules and a string of no-shows took some of the shine off the event.

On the surface there is nothing but good news at the IAA: the European car industry can boast of five years of non-stop growth, projected to continue this year, and its 12.6 million employees on the Old Continent.

Almost 1,000 exhibitors will fan out across the 200,000-square-metre area — the size of 27 football pitches — of the German financial capital’s trade show grounds.

The show, which opened with two days of media previews on Tuesday, will feature 50 carmakers, a string of parts suppliers and internet giants like Facebook and Google.

And Germany’s VDA car industry federation promises some 228 new models will make their global debut during the show, many of them the urban 4x4s that sprang from nowhere to claim 30 percent of European new car sales over the past 15 years.

But away from the gleaming chassis, high-tech presentations and optimistic keynote speeches, warning lights are blinking on the dashboard of an industry that remains key to Europe’s economic health.

– Battle on many fronts –

The auto industry has yet to atone fully for the “dieselgate” emissions cheating controversy, with suspicion spreading beyond Germany’s Volkswagen group — the first domino to fall in 2015.

Fairgoers headed into the convention centre Tuesday were given a stark reminder of the scandal by a group of Greenpeace protesters carrying banners that read “The oil age is ending”, as they stood beside an upright blue VW car made to look like it had crashed nose-first into the pavement.

Auto bosses will be closely listening to a Thursday opening speech from Chancellor Angela Merkel — who insists at election rallies that she is still “fuming” about the emissions trickery.

As the industry stares down potential diesel bans in cities and compensation claims, executives have taken refuge in grand promises of an electric and hybrid future.

German titans Volkswagen, BMW and Daimler all announced far-reaching electric vehicle programmes in the run-up to the IAA, hoping to hit ambitious hybrid and all-electric car sales targets with a flood of new models by the mid-2020s.

There, too, a shadow hangs over the progress, as gung-ho US entrepreneur Elon Musk’s Tesla Motors steals the spotlight from slower-moving European competitors.

Even mighty Volkswagen, the world’s largest carmaker, measures the volume of batteries it will need to produce to power its electric fleets in multiples of the output of the “gigafactory” — Musk’s Nevada production facility.

Along with Nissan, Peugeot, Volvo and Fiat, Tesla has shunned this year’s IAA, months after the first of its keenly-awaited Model 3 cars rolled off the production line.

Ferdinand Dudenhoeffer, an auto industry analyst at the CAR research institute, called the Model 3 “unquestionably the most important car of the year” and lamented that it would not be shown at the IAA.

But carmakers are increasingly balking at the cost of exhibiting at industry shows, which can run into the millions of dollars, preferring to organise their own product launches or appear at higher-profile electronics fairs like the CES in Las Vegas.

– Driving bans –

Time is running out for manufacturers to get electric, hybrid, and other alternatives to the internal combustion engine right — and to get consumers to share in the excitement.

“At the end of the day, you’ve got to make products that people actually want to buy, and not just things that we have to sell,” Ford Europe chief Steve Armstrong told reporters.

Britain and France have already vowed they will ban fossil fuel motors from 2040.

And in a surprise weekend announcement just before the IAA, China announced it was mooting its own ban, although officials have not named a date.

The move comes after protracted wrangling between Beijing, carmakers and western governments over plans for an electric vehicle quota in the world’s largest car market — a move that would favour China’s home-grown firms.

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