The Hindu Business Line : The 2007 Frankfurt Motor Show — A finger on the pulse of the industry

If an analyst needs to sense the mood of the auto industry, there are few better places than the nearest international auto-show. While the industry gets fully dressed up for these events and brings out their top guns with carefully crafted statements, a keen observer can judge both the spin and the inner angst. Frankfurt, this week, was no exception.

Each show has a characteristic flavour and in Frankfurt, one can expect heavy doses of impressive new technologies, over-the-top performance and power and an inevitable statement on the supremacy of the premium German manufacturers. After all, at their home turf, they may hardly be expected to do any less.

Yet, hard to believe, the mood in Frankfurt, when one peeled away the glitz and ceremony, was one of contrition. It was only about six months ago, in the events leading to the Geneva Motor Salon, that the European industry, particularly Germany’s, found itself solidly on the defensive, facing media and public censure for irresponsible fascination with speed and performance and forsaking the technology edge for hybrids and environment-friendly powertrains to the Japanese, principally Toyota. Loyal Germans have even begun to question the relevance of unlimited speeds on the famed autobahns, in a world that sees more and more regulation in the name of safety and environment.

For the Frankfurt Show this week, Toyota lost no opportunity to press home this advantage. When one awoke to the morning of the show, one found the newspaper packaged in a glossy cover with an advertorial tribute to the efficiency of the Toyota Prius Hybrid car. But this time, the German industry was prepared and the show offered a smorgasbord of environment-friendly products. The industry was eager to push all the right buttons and present a “kinder, gentler” and more responsible image.

‘Small’ and appealing

The big news from Frankfurt this week was “small”. Small cars, in the current context, are significant and appealing in multiple ways. First, small inevitably means better energy efficiency. It implies that less energy is wasted in the typical stop-start cycle of urban driving. Second, traffic gridlock and urban congestion favour a smaller footprint. As the Japanese discovered long ago with their keijidosha minicars, of which our Maruti 800 is an example — urban congestion can be somewhat alleviated by vehicles that occupy a smaller footprint. Already, countries such as Sweden offer incentives to owners of small fuel-efficient cars in urban areas. Third, small cars employ less material and are intrinsically more affordable. As Renault Logan has shown, there seems to be a larger market for low-priced vehicles even in the developed countries of Western Europe, let alone emerging markets, than had been anticipated by most manufacturers. In all, the rationale for small cars is a lot more compelling today.

STRETCHED BOUNDARIES

The headline of the show was the launch of the Volkswagen Up concept. While this is by no means the first effort by VW to address urban high-efficiency cars, the concept did stretch many boundaries. Developed within an overall length of less than 3.5 m, about the size of the Maruti 800, it offers adequate space for four adults in what appears to be a very efficient package. Significantly, it heralds the return to a historic concept for VW, in that it employs a rear-engine rear-drive layout, reminiscent of the legendary VW Beetle, yet in a very modern form.

Engines of two- and three-cylinder configurations are expected to be employed. In a way, the chosen architecture mirrors what has been disclosed about the Tata 1-Lakh car — not an inconsequential validation of the domestic effort. Yet, VW’s Up is unlikely to be priced for less than about 6,000 Euros, considerably north of the Tata target, although at European levels of specification. VW’s CEO, Dr Winterkorn, has gone on record that in the long term VW will set its sights on Toyota for global supremacy and for this task, this new product will not be a peripheral player.

Toyota was not to be denied its voice and used the Frankfurt stage to launch its new small car concept, the IQ. By now, one begins to understand that these small car concepts also require short names! In the case of the IQ, architectural design efficiency again plays a major role and this vehicle packs three adults and a child within an overall length of 3 m. In other words, for a car just slightly longer than a Smart car, it offers the greater practicality of more than two seats.

Apart from its plaudits for the hybrid Prius, Toyota has already made a huge mark on the European small car market with its Aygo and Yaris city cars which are produced locally. The IQ is expected to be more than just an auto show concept.

Two other small car concepts that are expected to be significant were the Ford Verve and the Mitsubishi cX. The Verve hints at the future Ford Fiesta, one of the bestsellers in the European segment and in this new generation, expected to return to the US, as that market also has started paying attention to smaller cars.

The Verve is much more expressive than its predecessor and extends designer Martin Smith’s kinetic design language to a smaller package. For Mitsubishi, the cX represents a return to the very successful 5-door Colt hatchback format of yesteryear.

Where “small” was not possible, manufacturers at least tried to make up with a “green” story. When BMW chooses to carefully deck each of its immaculately prepared white show cars with prominent mention of their fuel efficiency and not horsepower, you could sense something was up. Indeed, some of the BMW diesel models were certified to fuel consumption level of better than 20 km/l and with this BMW will deflect criticism that it is doing little to advance conservation. At the other end of the scale, BMW could not fully suppress its natural instincts and also launched its latest generation high performance 3-Series range (the legendary M3), now boasting a V8 engine with 420 hp. Now the choice is left to the buyer.

Predictably, at Frankfurt, Mercedes-Benz had a trump card with its “Diesotto” powered F700 luxury concept. As its name implies, the engine employs both the “diesel” cycle and the “Otto” (petrol) cycle. This technology is a harbinger of future engines, where the characteristics of both the diesel (compression ignited) and the petrol engine (spark ignited) are blended. Dubbed Homogeneous Charge Compression Ignition (HCCI), the target is to allow the engine to run like a petrol at high loads and as a diesel at part loads, allowing high power density and part-throttle efficiency. Imagine a large S-class Mercedes powered by an engine like the one in a Corolla with no loss in performance and you get a picture of the advantage.

Needless to say the engine is very complex, employs variable compression ratio and high levels of turbo-charging. Furthermore, each cycle of combustion must be individually controlled, requiring fast and accurate sensors and control system. While many manufacturers are working on similar technology, the public display of the F700 indicates that production readiness may not be more than just years away.

Outside, weary visitors, tired of trudging across Frankfurt Messe’s sprawling acreage, could also avail themselves of shuttle rides in sample fleets of Mercedes Fuel-cell buses or BMW’s Hydrogen powered 7-Series limousines.

Promoting hybrids

And there were hybrids wherever one looked. Stung by public criticism for ignoring hybrids, explained as useful only to the US market and not relevant for Europe, European manufacturers now have vigorously reversed course and seemed to be touting hybrids of all forms. BMW showed its X6 SUV-coupe powered by a petrol hybrid. Audi had its parallel hybrid fitted to the A8 and Q7 drivetrain while, at the other end, GM and Opel brought out their Flextreme “Plug-in” Series hybrid with lithium-ion batteries, which they expect to be production-ready within a couple of years.

Even their small car Agila, a sister to the Suzuki Splash, was shown with a stop-start E-flex system. Peugeot, which has staked its reputation on modern diesels proved that when one combines the virtues of a diesel engine and hybrid-electric drivetrains, the benefits are even better. Of course, there is that matter of cost. While concept cars hint at the future, production car launches are the backbone of most shows. It was evident that many of the production small cars have gained a lot of maturity and quality.

The new Suzuki Splash, a replacement in many markets for the boxy Wagon-R and its Japan-market rival, the new Daihatsu Cuore revealed that a lot of effort has gone into improvement of refinement, body structural integrity and quality. Fiat’s retro look 500 model is, likewise, a critical model for that brand and has been promoted with a lot of media exposure.

This gain in stature is important since most manufacturers are acutely aware of the obligations in Europe to achieve a sales fleet average fuel efficiency of at least 140 g/km of CO{-2} emissions by the start of the next decade. This translates to a fuel consumption level of better than 20 km/litre of fuel. To put that in perspective, even a manufacturer such as Mercedes Benz, BMW or Jaguar, will need to achieve a sales weighted fleet average fuel economy of over 20 km/litre — a figure matched in India by the Maruti 800. Further, sales trends in western Europe indicate that not only are small and compact cars the largest selling segments, they are also the fastest growing.

A little further upmarket, the most impressive gains seem to be made by Hyundai and Kia. The latter’s new Cee’d Coupe is impressively refined and puts many established European compacts to shame. Kia has made huge gains in Europe and successfully lured Peter Schreyer, formerly Audi’s chief designer. The effect is visible, and it is not a surprise that the Cee’d from many angles resembles a lowered Audi A3. Peugeot launched its new 308 hatchback, also in the C-segment.

This VW-Golf-sized segment has been showing the effects of aging and each successive generation appears with more luxury and specification. The new 308 family, typical of its class, weighs between 1350 kg and 1480 kg depending on specification. When one remembers that the first VW Golf in 1975 weighed no more than 850 kg, one realises the creep in girth over three decades.

Profitable mid-size

Mid-size cars are the most profitable segment for most manufacturers and, therefore, of considerable significance to the industry. Audi used the stage at Frankfurt to launch its new A4 that promises to further erase the gap in driving dynamics to the best in class (read BMW) while underscoring its leadership in style and perceived quality. Renault’s Laguna, also launched at the show, was likewise impressive in taking interior ambience to new levels of elegance. The moderate toning down of Renault’s avant-garde tendencies and giving room for Patrick LeQuement’s natural flair seems to have resulted in an extremely handsome form both on the inside and outside. The mantle of French chic seems to have been transferred from Peugeot to Renault.

China has been the other lightning rod for criticism in Europe. The previous Frankfurt show in 2005 saw the first appearance of a small contingent of Chinese manufacturers. The weekend prior to that show, the German Auto Club crash-tested a model of SUV from China. The footage of that crash-test, which implied that the front occupants of the vehicle stood no chance of survival, was re-played over the local television over the entire weekend.

The message was clear — Chinese products were dangerously unsafe. This year, media attention has been focused on two models of Chinese vehicles that seem to owe a lot of inspiration to specific models from Mercedes-Benz and BMW. BMW has been vehement in condemning such implied plagiarism and is reported to have threatened legal action. Understandably, one did not see as many Chinese manufacturers as expected. They were apparently busy elsewhere. At the Moscow show last week, 22 Chinese brands displayed over 60 different models for the Russian market.

(The author is chairman of Sumantran Consulting, a consultancy and advisory practice in the auto industry.)