Geneva show under threat amid bailout dispute

Geneva, Switzerland – The organisers of the Geneva auto show have said the event may not be held next year amid a dispute with the local authorities over a bailout and a reluctance by some automakers to attend.

The Swiss show was cancelled this year due to the coronavirus pandemic.

The Geneva International Motor Show (GIMS) Foundation, which organises the annual event, has rejected the terms of a CHF16.8 million (€15.7 million) bailout loan from authorities in Geneva because the authorities have asked for a guarantee that that the show will be held next year.

Some automakers are reluctant to commit to attending the show next year, the new director general of GIMS, Sandro Mesquita, told Automotive News Europe in a phone interview.

"The signals we are receiving from the brands are more in the direction of 2022. The whole industry is facing a huge challenge with the Covid crisis," Mesquita said. "For the moment we are thinking of organising the next event in two years' time."

The loan would have helped repay CHF11 million to automakers after the event was cancelled in March, while the remaining money would be used to stage the 2021 event. 

"The situation is still not clear," Mesquita said. "If we again have to cancel next year it would just be a catastrophe for us."

Authorities in Geneva said that they cannot pay out the money without the guarantee of a show next year.

"We didn't want a situation where we lend almost 17 million, then six months later they won't organise the event because then you have a political problem," Pierre Maudet, the councillor in charge of economic development for the State of Geneva, told Automotive News Europe.

The show, which is held in March, is the largest event in Switzerland, generating around CHF200 million in income for the city, the authorities said.

Under the terms of the loan, GIMS would have pledged its 7% stake in the Palexpo convention centre, where the show is held, to the Geneva State as a guarantee the loan would be paid back.

The State calculated the stake was worth CHF16.8 million after it fell in value following the cancelation of this year's event.

"The auto show represents a third of the value of Palexpo. If you don't organise in 2021 then that value goes down and you lose money," Maudet said.

The decision to spend CHF11 million on reimbursing automakers for stand space represents a U-turn from March, when the show's organisers said that because the Swiss government essentially banned the event, it could claim 'force majeure,' which would let them break automaker contracts without penalty.

"A claim against the auto show will not have success. There are no refunds or litigation possible," Maurice Turrettini, Chairman of the Foundation Board of GIMS said in a statement in March.

GIMS will now reimburse "fully" money automakers paid to rent stand space at the event. "Legally we are not liable, but this is not our intention, our intention is to reimburse," Mesquita said.

Under Mesquita, who took over the position 1 May, the GIMS Foundation is pursuing other avenues to raise money, including investors and financial institutions. It has also approached the Swiss government for help, Mesquita said.

The Geneva auto show was facing falling exhibitor numbers before the 2020 cancellation as automakers redeployed precious finances to launch new cars in a cheaper environment.

After other auto-show cancellations this year -- including Detroit, New York and Paris -- automakers may start to believe such events are no longer needed.

For example, Porsche said that coverage for a hastily arranged digital reveal of its 911 Turbo S flagship sports car had outstripped that of last year's Geneva reveal of the 911 Cabriolet, a more important model in terms of sales.