Image: French auto group Renault's chairman Carlos Ghosn
Joel Saget  /  AFP - Getty Images
French auto group Renault’s Chairman Carlos Ghosn poses in front of a new Coupe Megane during a press conference at the Paris Motor Show this week.
updated 10/2/2008 10:56:05 AM ET 2008-10-02T14:56:05

The Paris Motor Show had both vroom and gloom as it opened Thursday under the cloud of global financial turmoil.

Automakers made bold sales predictions, but unveiled smaller and more fuel-efficient cars to cater to consumers both cash-strapped and environmentally conscious.

Honda unveiled a new five-door gasoline-electric hatchback to challenge rival Toyota Motor Corp.’s success with the hybrid Prius. Honda said its Insight would be cheaper “than any other hybrid car on the market,” to make the low-emission technology affordable for more consumers. The Japanese automaker aims to sell 200,000 of the cars each year, launching next spring in Japan, Europe and North America.

Renault showed off a revamped Megane compact hatchback. France’s second-largest automaker, which is cutting 6,000 jobs to maintain profitability, hopes the car will make up for poor sales of the low-cost Laguna.

The shaky economic outlook cast a pall over the glitz. “It’s not good,” Volkswagen CEO Martin Winterkorn said of the financial climate.

“We don’t know if we are at the start of the end or the end of the start,” said Renault CEO Carlos Ghosn, who estimated that the global economic slump could last as long as two years, denting auto sales.

But automakers, with rock music and clouds of dry ice, still pulled the wraps off plenty of sleek models, testimony to an industry working to adapt to an era of expensive gas and mounting concerns about global warming.

The displays covered the entire range, fast to slow, luxury to economy. Renault displayed a Formula One racer. Peugeot showed a speedster for the Le Mans Series. Mercedes unveiled its latest armored limousine for VIPs, described as “luxuriously spacious and superbly comfortable.” Eye-grabbing Ferraris competed for attention with nonpolluting electric vehicles. Underscoring the need for green, some models had the amount of carbon dioxide they emit pasted in large numbers down their sides.

The two-week auto opens to the public on Saturday, after two days for media only.

CEO Christian Streiff of PSA Peugeot-Citroen, France’s largest carmaker, said he was sticking to his target of selling 4 million vehicles by 2010, despite “an economic climate much tougher than forecast when working out the plan.”

Citigroup expects 2008 to be the first year of volume declines since 2001 for the global car industry, and last month it lowered its outlook for this year and next after double-digit declines in new car registrations in western Europe, the U.S., and Japan.

Audi, Volkswagen AG’s luxury car subsidiary, said Thursday that it sold 95,000 cars in September — up 12.2 percent from the same month last year. Over the first nine months of the year, unit sales were up 2.9 percent to 762,000.

But September sales in the United States were down 5.4 percent. There, “the situation is the worst it has been since the mid-90s,” with no turnaround expected before the middle of next year at the earliest, board member Peter Schwarzenbauer said.

On Asian markets, shares of major Asian automakers took a beating Thursday after they reported dismal September sales figures in the United States, their most important overseas market.

Overall U.S. auto sales plunged last month, dropping below 1 million for the first time in more than 15 years as some consumers struggled to get car loans and others stayed away from showrooms amid bank failures and Wall Street turmoil.

Sales at every major U.S. and foreign brand fell at least 24 percent from the previous year, with the exception of General Motors, which said it sold 16 percent fewer vehicles.

GM’s chief operating officer, Fritz Henderson, said the automaker can’t rule out the need for more restructuring if the economic crisis worsens and said it was “extraordinarily important” that U.S. lawmakers pass a financial bailout to shore up confidence.

France’s car market has held up, thanks to government incentives for buyers of green vehicles. The French car manufacturer’s association said Wednesday that new car registrations rose 8.4 percent in September from a year earlier.

Last year, France introduced rebates and surcharges to encourage car buyers to choose more environmentally friendly vehicles. Under the system, dubbed “bonus-malus,” car buyers can take money off the purchase price depending on how much CO2 the vehicle emits. Larger rebates are awarded for cars meeting stricter emissions criteria, from 200 euros ($287) all the way up to 5,000 euros ($7,175) for electric vehicles putting out less than 60 grams of CO2 per kilometer.

Worried that carbon dioxide emissions from road transport are rising, European lawmakers are also gearing up to set goals for each carmaker to sell more low-carbon models — and fine them if they don’t.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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