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COMMENT: Between hope and worry

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

The German car industry is optimistic. The model offensive launched at the Frankfurt IAA should act as a 'sign of confidence' and spur German buyers to renounce their fearful savings mentality and invest in new cars again - if not right now, then at least by the spring of 2004.

Hardly ever before have such high hopes rested on a Frankfurt Motor Show and on the automobile.

The 'sales machine' of the companies will be lubricated with the help of new products, while the German economy will get a boost of new momentum. New jobs will be created, profits will revive and stock prices should start going up again. Such a scenario would, indeed, be nice.

But whether the auto industry can accomplish all of this is arguable. The most important 'locomotive' for the economy is itself in need of repair at least parts of it. Some wheels aren't quite properly balanced, while other parts have over the years gotten rusty or have put on weight. The locomotive moans and groans under its load. Some wagons already have had to be uncoupled.

To restore original strength, some repair work has been started in the last few months during the low-speed part of the ride. Opel has stepped up its cost-cutting program, Ford has announced a new round of savings and some personnel cuts will likely have to be made in the industry in a 'socially-acceptable' way.

Mercedes-Benz is trying to lower costs by replacing expensive technological systems with equally effective but cheaper solutions. And even Porsche has had to recognize that laurels can fade for this reason the board prescribed a further cost-reduction program for the company.

It is also becoming clear that some sales projections have been built on sandy ground. Luxury cars don't sell as well as expected and some markets are developing more slowly than hoped for.

And, finally, there is the consumer, who has enjoyed haggling over prices so much, he is not prepared to abandon that attitude.

"How are we supposed to make a reasonable production planning for 2004 under these circumstances?" groaned the CEO of a big German supplier.

The confidence put on display at the opening of the IAA stands on shaky feet.

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