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ON THE MONEY: Paris glitz and glamour is all automotive gloss

Date: 15 October 2008

Rupert Saunders

Car manufacturers were putting a brave face on their economic woes at the Paris motor show, one of the landmark events of the international motor industry calendar

It was truly surreal to travel overnight from Britain, a nation in the grip of an economic crisis, to the exhibition halls of the Paris motor show, with all their glitz and glamour.

There were major car launches, there was loud music, there were stunningly beautiful girls, there were press receptions - and the Champagne was flowing.

But scratching beneath the surface revealed a different story. I spent most of my time in back offices with gloomy senior executives telling me their survival plans because the truth is that the motor industry, like you and me, is facing a reality check.

New car registrations in the UK were down 22% in September, a drop nobody can afford to ignore especially as they'd recovered from around 35% down in the final week of the month - a figure at least one executive suggested was nearer the real picture.

What is the reaction likely to be? The executives I spoke too were clear they would move to protect their dealer networks, their customers and their residual values by cutting production, cutting sales targets and reducing stock.

Take this from Pierre-Louis Colin, managing director of Peugeot in the UK: "It is the responsibility of the manufacturer to protect the sales network. We will target them on reasonable objectives, they can achieve."

Or this from Roelant de Waard, chairman of Ford: "Businesses will have to adapt to the new sales level. We have already adjusted our targets from April and are happy they are at an appropriate level."

This is good news for business car managers. Okay, some of the short-term deals might disappear - although I am sure there will still be end-of-quarter specials - but a more realistic approach to targets and sales volumes must bring a more orderly market, more stability and some protection from crashing residual values.

We have heard this all before, of course. And, in the past, somebody has always broken ranks, which opens the floodgates again. But I think we all realise that this time it's different, and that certainly was reflected in the mood in Paris.

So, I actually came away from Paris more confident than when I went. Lots of shiny new cars coming to the market and car companies pledging to keep the lid on sales volume - sounds unlikely but it could actually happen.