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Daimler, Volkswagen tout emissions gains, display gas guzzlers

DaimlerChrysler AG Smart ForTwo models, with „CO2 Champion” on the sides, ferried people to the Geneva International Motor Show. Volkswagen AG used Polo models inscribed with „102g CO2/KM” to promote a new diesel engine line.

At the show, the German carmakers emphasized power and speed. The white C-Class model turning slowly under the spotlights at the Mercedes-Benz stand sported a 3.5 liter motor capable of accelerating the car to 100 kilometers (62 miles) per hour in 6.3 seconds. At Wolfsburg, Germany-based Volkswagen's Audi stand, the S5 coupe, with a 4.2 liter motor, hits that speed in 5.1 seconds. „Sports cars and SUVs keep doing well in Europe because driving pleasure is big here, the Formula One racing is big here and the Autobahn allows sports cars to be enjoyed more than elsewhere,” said Stefan Bauknecht, a fund manager at DWS Investment in Frankfurt who manages $1.6 billion in assets, including carmakers' shares. The European Commission last month proposed binding cuts in engine emissions to 130 grams of carbon dioxide per kilometer from about 161 grams now. President George W. Bush in January proposed raising the fuel efficiency standard for passenger vehicles by 4% a year to reduce gasoline consumption.

The European Union effort would raise car prices, cut sales of larger vehicles and threaten some of the 2 million jobs in the European auto industry, companies including Stuttgart, Germany-based DaimlerChrysler and Bayerische Motoren Werke AG warned in a January 26 letter. In the US, a National Highway Traffic Safety Administration analysis using 2002 data showed Bush's proposed increase would cost automakers $100 billion over 10 years. German Chancellor Angela Merkel, who in a Financial Times interview yesterday said that Europe should take the international lead on combating climate change, vowed in January to protect her country's carmakers, saying her government would block any attempt to introduce a blanket emissions reduction for all cars and will instead push for limits to be set by type of vehicle.

„It's just not possible to have a C-Class segment premium car with all the safety and other features that customers want getting fuel economy of 5 liters per 100 kilometer,” DaimlerChrysler CEO Dieter Zetsche said in an interview at the show this week. „There are other issues than just CO2 that need to be considered.” He made the comments shortly before showing off a new 500 horse-power racing version of the new C-Class sedan. DaimlerChrysler and other German carmakers were not quick enough to recognize the interest in hybrid-powered vehicles, that use a combination of gasoline and electricity, on the part of consumers, Zetsche said. Mercedes won't have a hybrid-powered vehicle until 2009, 12 years after Toyota Motor Corp.'s first Prius model went on sale. The company is counting on diesel motors, which produce more CO2 emissions than gasoline engines, to help improve fuel efficiency to meet emissions targets.

Nissan Motor Co. sells the a gasoline-electric Altima sedan in the US to meet efficiency standards at a loss, said Carlos Tavares, executive vice president at Tokyo-based Nissan, said in an interview after presenting a new version of the company's X-Trail SUV. „I still believe they are not a very good deal,” Tavares said of hybrid vehicles BMW, based in Munich, is offering a new version of the compact 1-Series to help offset the polluting impact of its new X5 sport-utility vehicle. The 1-Series, a three-door hatchback, emits 123 grams of carbon dioxide per kilometer. The X5 4.8i model emits 299 grams of CO2 per kilometer. „None of these manufacturers will be able to comply with average fleet emission standards unless they have small cars in their portfolio,” said Patrick Juchemich, an analyst at Sal Oppenheim in Frankfurt. The German manufacturers are lobbying to differentiate emission targets among segments, with sport-utility vehicles, high-performance sports cars and large sedans having a higher limit than compacts and other small cars. „There are a lot of people who talk about emissions but don't understand the issue,” said Porsche AG CEO Wendelin Wiedeking in an interview at the show. „The carmakers understand the discussion. We invest in new technology that eventually trickles down to the mass manufacturers.”

That makes no sense, said Frederic Saint-Geours, head of Paris-based PSA Peugeot Citroen's Peugeot brand, and Patrick Blain, head of sales at Renault SA in Boulogne-Billancourt, France. Both of them said emissions regulations should apply evenly across all carmakers. Stuttgart-based Porsche's fleet has the highest emissions of all European carmakers. The company, which isn't presenting any major new models at the show, builds the Cayenne SUV that produces 378 grams of CO2 a kilometer. Peugeot's fleet, made up primarily of compact, subcompact models, emits an average of 146 grams of CO2 a kilometer, Saint-Geours said. „All the carmakers are on a PR campaign to try to influence the agenda” on emissions regulations, said Adam Jonas, an analyst at Morgan Stanley who attended the Geneva show. „That doesn't mean their going to stop developing their really powerful engines or bigger vehicles, that's just not reality.” (Bloomberg)