PHOTO: Carmakers Push For Aid, German Sales Up

Other companies at the show kept the emphasis on tackling the crisis and coping with the overall downturn.

Carmakers kept up their calls for more financial help on Tuesday as the annual Geneva Motor Show opened against the backdrop of the continuing financial crisis.

A jump in German car sales last month helped keep the gloom at bay, and the head of the VDA industry association said car markets might start to recover later this year.

If other countries' economic stimulus packages gained traction, too, "it could come to the first gradual recovery of global sales in the second half of the year", VDA chief Matthias Wissmann said at the show.

German state incentives to scrap old vehicles and switch to new models with lower emissions helped new car sales in Europe's biggest market leap by 21 percent to 278,000 vehicles in February compared with a year ago, the first rise in German new car sales in half a year.

Encouraged by a 2,500-euro bonus for scrapping cars more than nine years old and tax changes that favour fuel-efficient models, Germans have been rushing to showrooms.

Domestic orders jumped 63 percent in February.

In Italy, Fiat SpA expects vehicle sales in March to be in line with last year or slightly better, boosted by government incentives, Fiat Auto unit Chief Executive Lorenzo Sistino told Reuters at the show.

But Sistino said he could not predict how long the effect of the incentives would last.

HELP STILL NEEDED

Other companies at the show kept the emphasis on tackling the crisis and coping with the overall downturn.

GM is still pursuing aid for its European businesses of Opel in Germany and Vauxhall in the UK and said on Tuesday it was still open to options about what stake it might retain in those businesses.

GM's European president Carl-Pieter Forster said he had received positive signals from the British government over aid for Vauxhall/Opel and believed the European market was close to bottoming out.

However, German Economy Minister Karl-Theodor zu Guttenberg said on Tuesday Opel had not supplied the government with enough information for Berlin to decide whether to rescue the company.

Opel, which employs about 25,000 people in Germany, has said it needs about 3.3 billion euros ($4.17 billion) in state aid from European governments to save jobs and keep plants open.

But at the show on Tuesday, GM's Forster said big pay cuts would be necessary as well to stave off the closure of three plants in Europe.

And OECD chief economist Klaus Schmidt-Hebbel said governments worldwide should resist the temptation to bail out car manufacturers, steel producers or any sector other than the systemically crucial finance industry.

Public aid for specific sectors was not a good idea because other sectors would queue up for similar aid from a limited pool of public funds, said Schmidt-Hebbel. The OECD report says governments should pursue policies that promote both short- and long-term economic growth while avoiding steps that shelter national industries from international competition.

INVENTORY CUTBACKS

Meanwhile, Renault is aiming to go beyond its target set last month of cutting stocks of unsold cars by between 800 million euros ($1 billion) and 1 billion euros this year, Chief Operating Officer Patrick Pelata said.

It also expects to increase market share in France this year, once "stocks have been purged by all manufacturers (and) when the market stabilises", Pelata said.

Ford in Europe will continue to review its production capacity and all cost areas, regional chief executive John Fleming said, while Volkswagen's Audi unit said its sales worldwide were down 11 percent in February at 63,000 vehicles and it planned to produce 12,500 fewer cars in 2009 as it sees sales down 10 percent.

GREEN SHOW

Nissan said on Tuesday it would build its new compact NV200 van at its Barcelona plant for the European market, with sales of the light commercial vehicle (LCV) to start in the second half of 2009.

Unveiling the model in a world premiere at the show, Japan's third-biggest automaker said it aimed to sell 150,000 NV200s globally. The van will go on sale first in the Japanese market this spring, Senior Vice President Andy Palmer said.

As C02 legislation tightens and companies are granted massive sums to speed up research into ways of cutting vehicle emissions, the spotlight at the Geneva show this year has been put on green technologies and the industry's longer-term prospects, with a "Green Pavilion" set up to showcase various electric and hybrid vehicle concept cars. ($1=.7924 euros).

Take a look at the photo galleries: Geneva Motor Show Part 1 and Geneva Motor Show Part 2.