Small is big favourite at Geneva auto show

Geneva  Automakers are thinking small — in size, not ambition.

After years marked by environmental concerns, then the economic downturn and now European austerity measures, car manufacturers have honed their products to cater to cost-conscious buyers.

And it's not just compacts and SUVs that are getting smaller. Even premium automakers are downsizing.

At the Geneva Motor Show, which opened to the media Wednesday, Audi unveiled a new A3, Mercedes-Benz its rejuvenated A-Class, and Volvo its V40.

"Buyers are increasingly looking to downsize and hunt for savings in terms of running costs and depreciation, while enjoying the status and quality of premium brands," Tim Urquhart, analyst at IHS Automotive, said.

Competition intensifies

Urquhart said the trend could increase pressure on mass-market automakers like Fiat, Renault, PSA Peugeot-Citroen and General Motor's (GM) Adam Opel — which are being caught between both premium carmakers and value carmakers such as Volkswagen's Skoda and Korean manufacturers Kia and Hyundai.

GM's European unit Opel received a boost on Monday when its Ampera, an electric car with an extended range of 500 kilometres, was named European Car of the Year by automotive journalists from 23 countries on the eve of the motor show.

Finalists for the award were all smaller, more fuel-efficient cars. The Opel Ampera won with 330 votes of a total 1,475 cast, ahead of the Volkswagen Up! with 281 votes and the Ford Focus with 256.

General Motors and Peugeot last week announced an alliance they hope will improve their prospects in the difficult European market. GM will take a 7 per cent stake in Peugeot, Europe's No. 2 automaker, in a deal that foresees a common platform by 2014 and synergies in the purchase of parts. The carmakers say it will save them $2 billion (Dh7.35 billion) a year within five years, split roughly equally.

Peugeot is unveiling the new 208, a model that is especially important for a company heavily dependent on European sales. Peugeot has made the 208 both shorter and lighter than its predecessor, the Peugeot 207, a sign of where the auto industry is heading.

"The Peugeot 208 is both key to helping the French out of the crisis, while at the same time showing the potential to be a trendsetter," Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg in Germany, said.

On the other side of the alliance, GM's Opel will be introducing its new Mokka compact SUV, entering the expanding segment of compact SUVs occupied in Europe by the Suzuki SX4 and the Fiat Sedici. Just 14 feet long, the Mokka is still classed as a five-seater.

IHS Automotive forecasts the compact SUV segment, which grew from 100,000 in sales in 2010 to 160,000 last year, will expand to 400,000 by 2014. Citroen, too, will be aiming for that market with its C4 Aircross.

Fiat will unveil the new 500L — a multipurpose version of its hot-selling remake of the iconic 500, now nearly five years old. The five-seater vehicle is on a slightly larger platform than the 500 and replaces the now phased-out Multipla.

The 500L is being produced at Fiat's factory in Kragujevac, Serbia, and will be introduced in Europe at the end of 2012.