European carmakers try hybrids, reluctantly By Mark Landler FRANKFURT: This was the week that Europe's reluctant automobile industry bowed to the popularity of hybrid technology, with a skein of announcements by German carmakers that they would follow Toyota's lead in developing dual gasoline-electric engines. But backstage at the Frankfurt International Auto Show, a rather different picture emerged: Europe's auto executives remain privately skeptical, even dismissive, about the merits of hybrid technology. The spate of press releases may be just that - a public-relations response to what many in the European auto industry believe has been the Japanese industry's shrewd promotion of a so-so technology. "This was a marketing battle between Europe and Japan, and diesel engines were Europe's proposal," the chairman of Porsche, Wendelin Wiedeking, said in an interview. "We must accept that we lost." Adding to the pressure to conform, some Europeans said, is the sharp rise in oil prices, which has put renewed focus on the search for alternatives to fossil fuels. Porsche said this week it would build a hybrid version of its Cayenne sport utility vehicle by the end of 2010. It is joining an alliance with Volkswagen and Audi to develop hybrid engine technology. But Wiedeking declined to say how much Porsche would invest in the project. Volkswagen's chief executive, Bernd Pischetsrieder, played down his company's investment, even though it announced a hybrid venture with a Chinese partner, in addition to the Porsche project. In Europe, at least, Pischetsrieder said hybrids would not command a premium. "I can't afford to spend money on something customers won't pay for," he said. "I'm not going to spend any more than I have to." Toyota, which pioneered hybrid cars and is the market leader, plans to sell one million of them by early in the next decade. Its Lexus division showed off two hybrid models here: the GS450h, which it promotes as the first hybrid luxury sedan, and a sport utility vehicle, the RX 400h. But most Europeans see only a niche market. The chairman of BMW, Helmut Panke, predicted that hybrid vehicles would eventually account for 2 percent to 3 percent of the industry's volume sales - chiefly in the United States, with a smaller presence in Asia and still less in Europe. BMW recently joined an alliance with General Motors and DaimlerChrysler to develop hybrid engines. It has not disclosed plans to produce a vehicle, though Panke said it would have one within five years. "We'll all have one within five years, but this is not the big be-all and end-all of technology," he said. BMW is investing heavily in the development of hydrogen-powered cars, which Panke said he believes is the long-term answer to dependence on oil. He concedes that because of problems with distribution and storage, hydrogen will not be a marketable fuel for 15 to 20 years. Still, BMW has pledged to make a version of its 7-series sedan that runs on both hydrogen and gasoline in the next few years. BMW displayed a rocket-like, hydrogen-propelled vehicle here that it said achieved a speed of more than 300 kilometers per hour, or 187 miles per hour. Few European auto executives can even discuss hybrid technology without referring to a recent test conducted by a German trade magazine, Auto Bild, in which a Mercedes-Benz SUV, with a diesel engine, was pitted against the Lexus RX 400h, in a drive from New York to San Francisco. The Mercedes finished with substantially better fuel efficiency. Advocates for hybrid technology concede that in long-distance driving, the most advanced diesel engines are more efficient than hybrids. But in city driving, with its frequent stops and starts, switching between gasoline and electric motors gives drivers an edge in fuel economy. "The problem with hybrids is that in economic terms, they don't make a lot of sense," said Garel Rhys, the director of the Center for Automotive Research at Cardiff University in Wales. Because they use gasoline and electric motors, he said, hybrids are more expensive than regular cars. The engines are also heavier - a fact that BMW says is difficult to reconcile with its reputation for agile, zippy cars. While European carmakers say they are ready to respond to the growing demand for hybrids, especially in the United States, some worry that governments will tilt the playing field by imposing emission standards that favor hybrids over, say, those with clean-burning diesel engines. In the United States, diesel has never been able to shake its 20-year-old image as noisy, smelly and dirty. Panke said the high price of oil might prompt Americans to give it a fresh look, particularly since the newest turbocharged diesel engines are almost indistinguishable from gas-powered ones. The debate over hybrid technology was so intense here this week that it almost obscured another new challenge from Asia: Chinese carmakers, which appeared for the first time at this show. Three companies presented their wares - Landwind, Geely, and Brilliant - though only Landwind has already sold cars in Europe. Peter Bijvelds, a 27-year-old Dutch car dealer who has the exclusive European distribution license for Landwind, hopes to sell 1,000 of them here this year. Built in the Chinese city of Nanchang by Jianling Motor, the Landwind is a boxy sport utility vehicle, which starts at15,000, or $18,390. Bijvelds claims that is about one-third cheaper than its closest rival, and should help finicky Europeans get over their qualms about buying a Chinese car. "They already produce our clothes and our shoes," he said. "Why shouldn't they produce our cars?"