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A new model of the Volkswagen Golf GTI is displayed on media day at the Paris Mondial de l'Automobile September 27, 2012.


The European car business is feeling decidedly blue these days, yet so many of the new models on display at the Paris motor show – officially the Paris Mondiale de l'Automobile – were anything but.

Among the 100 or so new models revealed in Paris, Mercedes-Benz had a striking electric metallic blue SLS Electric Drive that will surely become a production car and might even find its way into a Canadian dealership. And France's Renault offered an all-new orange/lemon Clio small car that we can only admire because it will never go on sale in Canada.

Meanwhile, Ford peeled the wraps off a shocking copper/bronze face-lifted Fiesta subcompact and the updated Volkswagen Golf GTI "concept" – as near to a production car as they get – even had a fire-engine-red slash across the headlamps. Arguably, we've never before seen such a commitment to rainbow colours on such a grand scale at an auto show. Even Porsche got into the bright colours act with green brake calipers to match the Porsche Panamera Sport Turismo hatchback/wagon's e-hybrid badges.

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It all felt a little bit like putting lipstick on a pig. Because, make no mistake, the European auto industry is more a sow's ear than silk purse. Here on the Continent, the only truly healthy car company is Volkswagen Group which, according to the industry lobby group ACEA, controls 25 per cent of the entire European market.

The rest, especially the French car companies, are suffering and struggling. PSA Peugeot, for instance, has been Europe's No. 2 for a long time, but is now being hammered by falling sales, controversial layoffs and unheard-of plant closings that are not just an industry matter or an economic challenge, but a political football for France's socialist president. Remember, in Europe you'll find a massive level of state interference and support for the car business. Layoffs have traditionally been rare, downsizing in general virtually unheard of.

But that seems poised to change. Volume car makers are really suffering as a whole in Europe and cuts are coming. Bloomberg reports that figures from AlixPartners show that car makers selling to the masses have seen their market share fall from 85 per cent 15 years ago in Europe to 65 per cent this year. The winners: premium manufactures, mostly from Germany, and low-cost players led by Hyundai and Kia from South Korea.

With sliding sales come losses, of course. Canadian taxpayers, who still own a chunk of General Motors, should note that Bloomberg reports that GM's Opel unit has amassed $700-million (U.S.) in losses in the first half of this year; over the last dozen years, GM has spent $16-billion propping up its German unit. Morgan Stanley, which is calling for GM to jettison Opel, is suggesting Opel might cost GM another $12.3-billion over the next decade.

GM says an Opel turnaround is in the offing. Now where have we heard that before? The latest Opel remake will be underpinned by the 23 new vehicles to be introduced by 2016, notes Bloomberg. If you're skeptical, you've good reason to be and you are hardly alone.

Yet, dire as the Opel situation is, the picture is even gloomier at France's Peugeot. Reuters reports that Peugeot is losing massive amounts and, as Fitch said in a report, expects to lose more still in 2012 and 2013, while "the potential for cash burn in 2014 remains high." The other big French car company, Renault – 15 per cent owned by the French government – also is struggling, with August sales down a staggering 20 per cent and losses mounting.

Ford, meantime, has said it expects to lose $1-billion in Europe this year, with sales down 29 per cent in August. Fiat/Chrysler CEO Sergio Marchionne says the European picture is so dire he'd like all of the Continent's car companies to band together to form a common downsizing strategy, an idea the Germans appeared to dismiss out of hand.

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How awful is Fiat's situation? Sales were down 24 per cent in August. With resources obviously tight, Fiat had not a single new model to show in Paris, yet Automotive News reports that, at a recent Las Vegas dealer convention, Chrysler showed 66 all-new or significantly revamped models. Indeed, the industry publication reports that without its 58.5 per cent stake in Chrysler, Fiat's bleeding in Europe would have led to a loss of €519-million ($669-million) in the first half, instead of a profit exceeding €700-million.

Ah, but the Germans remain strong. Their export-driven car business is riding an undervalued euro to great successes. So naturally, because VW is such a force, the star of the show in volume terms was VW's Mark VII Golf.

The Golf is Europe's best-selling car, the leader of the C segment (compact cars) and is offered in hatchback, cabriolet and wagon versions. VW hasn't done anything of note to improve the Golf since the current version arrived in 2008, so this new Golf coming to Canada next year is noteworthy.

Still, the car on the VW stand did not offer anything over-the-top special; what we saw looked more evolutionary than revolutionary.

But it's what you cannot see that matters. Underneath that Golf skin rides the VW Group's MQB platform, a shared architecture with other VW brands, from Audi to SEAT to Skoda and perhaps more. Indeed, the new-generation Audi A3 also rides on the MQB platform and that new A3 will come to Canada next year.

Another star of the German auto industry – as opposed to the many sows of the rest of Europe – is the BMW Group. The most interesting things we saw from the Bavarians were the Concept Active Tourer and the Mini Paceman. BMW types skirted the question, but it seems obvious that the Active Tourer is more than a mere five-door hatchback; it looks to be a rival for Mercedes-Benz's B-Class, an all-new version of which goes on sale in Canada this year. Meanwhile, the Paceman is a three-door Mini Countryman that adds a seventh model to the Mini lineup.

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So here's what's important about the Active Tourer: it rides on a front-wheel-drive architecture that will spawn a host of future lightweight and fuel-efficient BMWs. Yes, front-drive BMWs are on the way to help this premium manufacturer meet government fuel economy and emissions regulations.

BMW teased us more by making the Active Tourer a plug-in hybrid with electric drive powering the rear wheels. The novel idea here is that the gas-powered front wheels can be replaced or supplemented by the electrified rears.

While BMW toyed with visions of electrics for the mass market, Mercedes-Benz went the opposite direction. The SLS Electric Drive looks the part of a super sports car EV and suggests that at least one auto maker has come to the conclusion that plug-in cars need to be branded as upscale, high-tech models for the rich, famous and socially conscious.

With four electric motors, the SLS Electric Drive can accelerate 0-100 km/h in four seconds. So the rechargeable SLS is aimed at the coming and equally high-zoot Audi R8 e-tron due next year. Both will likely be priced closer to $200,000 than $100,000.

And they'll probably sell in numbers that make them profitable for their German parents. Out of Paris, this was the takeaway: Europe's car companies as a group are scrambling to find ways to be make money like the Germans, who shockingly even have a possible formula to earn money on plug-in cars.

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About the Author
Senior writer, Globe Drive

In 25 years of covering the auto industry, Jeremy Cato has won more than two-dozen awards, including three times being named automotive journalist of the year. Jeremy was born in Montreal and grew up in the San Francisco Bay Area. More


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