PARIS - Armed with an array of new models, the world's automakers are aiming to charm thrifty European motorists at next week's Geneva car show and kickstart a long-awaited recovery in the region's auto market.
But as manufacturers increasingly trim prices and offer profit-eroding incentives to nurture wilting demand, they must also reassure investors and industry analysts in the Swiss lakeside city they are not sacrificing margins to prop up sales.
"The mood is likely to be cautious," said Commerzbank analyst Robert Ashton. "There are worries over European sales volumes and now concerns about pricing are growing too."
Most carmakers are boasting that a welter of new models will lure consumers back into showrooms and power growth this year, with Germany's car giants alone launching an unprecedented 57 new models, according to the country's auto association.
Many of the key new money spinners have already been unveiled or are set to stay under wraps until later this year. But industry experts are keen for a glimpse of Renault's new mini multipurpose vehicle -- the concept version of a new car based on its small and curvy Clio.
General Motors's Opel unit will be trumpeting the imminent arrival of its radically overhauled Astra, launched in September in Frankfurt and due to go on sale in March, in a direct challenge to Volkswagen's more expensive Golf.
France's PSA Peugeot Citroen will also be center-stage as it seeks to revive a dowdy lineup and flagging sales with its revamped 407 large sedan.
And Italy's Fiat, pumping out new crowd-pleasers to return to profit after tumbling deep into crisis over the last two years, will pull back the curtain on the "Trepiuno," a new concept version of its most famous brand, the tiny Cinquecento. Fiat Auto's new Chief Executive Herbert Demel will also make his first official appearance at the show.
But carmakers can launch new models till they are blue in the face and still make little money without a pickup in demand, which was shaken last year by the war in Iraq, weak economic growth and poor consumer confidence.
Car sales in the region dipped 1.6 percent in January, dashing hopes for a quick recovery this year, and some executives predict only flat or slightly brighter sales in 2004 in western Europe, which has lagged the improving U.S. market.
The car industry accounts for 4 percent of the European Union's gross domestic product and reflects the wider economy and in particular consumer confidence. More worrying than sales figures was news that Europe's biggest carmaker Volkswagen was already offering incentives on its recently launched new Golf range, which sent shudders through the sector and cranked up fears over a potential U.S.-style price war that could stymie profit growth.
"It's not full-on panic, but there's definitely a lot of concern," said Kepler Equities analyst Patrice Solaro. "Volumes are not good, pricing is looking dodgy and competition is fierce."
As if shaky demand and pricing pressure was not enough, European carmakers must also contend with fierce competition from Japanese rivals, who are chipping away at the market with well-priced cars adapted for local tastes.
Japanese and Korean carmakers -- led by the world's No. 2 carmaker Toyota -- boosted sales by around 20 percent in January and are keen to keep seizing market share by cracking the all-important diesel market.
European firms are likely to hit back at Geneva by trumpeting plans to expand further afield into high-growth markets such as eastern Europe and China, as they aim to keep sales rising amid tougher competition in their largely saturated home markets.
PSA will be showing a new version of its top-selling Peugeot 307, which will be built and sold in China, as Europe's second-biggest carmaker aims to double capacity in the world's fastest growing major car market by 2006.