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Geneva Motor Show Preview: Germans Go Luxury
Courtesy of Reuters
Photo Courtesy of DaimlerChrsylers AG
German carmakers, battered by a weak domestic economy, will emphasize their luxury offerings at next week's Geneva motor show, hoping to tempt big spenders with vehicles oozing appeal.

Although a German company made every second new car registered in western Europe in 2001, car-mad Germans bought fewer autos than the previous year and the country's producers have struggled to sell mass market models.

But rich car buyers seem to have ridden the recession without too many bumps and luxury carmakers have avoided the poor earnings and bleak outlooks that have hit their volume producer colleagues.

Porsche, the world's most profitable car company, reported strong first half profits in January and its share price has accelerated faster than one of its flagship 911s.

The stock has gained 23 percent since the beginning of the year and outperformed the Dow Jones Stoxx European auto index by more than 17 percent.

The company is planning to launch a sports utility vehicle, or SUV, later this year which is seen as a foolhardy risk to the racing car brand by some, while others see it as a clever way of offering Porsche owners the chance to buy a second model.

Shrouded in secrecy, the Cayenne has not been displayed in public yet and some observers have speculated it might get a show-stopping outing in Geneva.

"If they show us the Cayenne, I'll get straight on a plane to Geneva," said one Frankfurt-based auto sector analyst.

VW Goes Head-to-Head with Mercedes-Benz

Volkswagen AG, which posted a rise in profit for 2001 last month but revealed its fourth quarter had been very weak, will showcase its new Phaeton model at the show.

The Phaeton, a huge limousine designed to go head-to-head with the likes of DaimlerChrysler's exclusive Mercedes Benz S-class, is an attempt to take VW's brand image upmarket, although some have critised it for competing against its own Audi luxury unit.

Even Adam Opel AG, the ailing German unit of General Motors , will seek to put its best foot forward with its new Vectra model -- a staple of sales representatives across Europe.

Opel, hit by quality problems in the 1990s, has struggled in Germany where, according to its own market research, 90 percent of people know the brand but just 14 percent are prepared to buy one of their cars.

"We know we had a quality problem in the past," Chief Executive Carl-Peter Forster said at an Opel ad campaign launch in January. "We have massively improved quality and you now see we are rated above average on quality."

Of Germany's other big carmakers, BMW will launch an extended version of its new, hi-tech seven series, Mercedes shows off its new CLK coupe and VW unit Audi displays its top-of-the-range RS6 Avant.

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