EUROPEAN CARS BUILD ON UPTURN IN ECONOMY

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New strategies by car marketers in Europe-ranging from recycling to rebates-are kick-starting a recovery in the depressed auto world. Moreover, auto marketers are hoping to maintain the momentum by reversing last year's error of breaking commitments with their long-term agencies.

Helped along by the continent's improving economy, new car sales soared by 11.8% to 1.1 million vehicles in June as compared to sales in June 1993. Last year was the auto industry's worst since World War II, with sales falling 15% from 1992, to 11.4 million vehicles sold.

In Spain and France, auto marketers are trying to convince buyers they can't afford not to buy. A new government scheme that reduces new car registration and licensing taxes essentially results in a $900 saving on a new car in France and a $730 saving in Spain for buyers trading in 10-year-old models and older.

On top of this, virtually all automakers have jumped on the rebate bandwagon, advertising their own additional cash-back offers of up to $1,800 in France and $730-$2,200 in Spain.

Capturing the mood in Spain is Renault, with a TV spot by Lintas Madrid using nostalgic b&w newsreel images of Madrid's streets to play off a memorable old song called "Sighs of Spain." The slogan refers to financial incentives: "We'll exchange your sighs for smiles."

Spain is on the fast track to recovery, with sales of 95,000 in the month of June, up a stupendous 27.7% from from June 1993, according to the European Automboile Manufacturers Association.

Germany, Europe's largest car market and the hardest hit by the slump, lacks a government-led rebate program, but auto marketers have introduced incentives.

"Never before has the industry introduced so many different programs-hidden rebates or discounts or eased up leasing rates," said Ingo Krauss, chairman of Ford Motor Co.'s German shop Young & Rubicam, Frankfurt. Ogilvy & Mather handles elsewhere in Europe.

Ford, however, is adding something distinctly different to its rebate strategy: In addition to its own $2,000 discount, Ford will ensure your old car is recycled.

In ads breaking last month, the ads say "we give you $2,000 if you bring in your old heap," said Mr. Krauss, "with the additional benefit that we take care of the recycling. No one else has done it."

The ads end with the tagline "Ford. They do something."

Germany's car industry, the slowest to inch toward recovery, saw a 5% June sales boost to 300,300, the year's first increase in car sales in Germany.

The rebate focus in Germany picks up where last year's plan by several German car marketers left off. Trying in vain to reverse plunging sales, they boosted ad spending. The Volkwagen group alone upped its ad budget in Germany 51%, to $284 million from $188 million-but VW wasn't happy with its agencies, and made changes it seems to regret.

VW's Audi subsidiary in Germany is unlikely to renew at the end of 1994 its contract with Spiess Ermisch Andere, Dusseldorf, which replaced long-time agency DDB Needham Heye & Partner, Vienna, in late 1993. Audi moved an image campaign back to DDB Needham from Spiess Ermisch, and DDB, Spiess Ermisch Andere and two other agencies are pitching for the rollout of a new Audi model in early 1995.

BMW also seems to have changed its mind after moving its $50 million German account in 1993 from Scholz & Friends, Hamburg, to BDDP, which opened a German office for the account. None of BDDP's work has run-and BMW awarded its two biggest new model rollouts this year to other agencies.

Moreover, BMW returned to spurned Scholz & Friends for a campaign for its 7er, a revamped top-of-the-line BMW to break this summer. BMW also used Menzel Nolte, Hamburg, to introduce the new 3 Compact version of BMW's best-selling compact car.

Neither company would comment on its agency relationships.

The biggest account swap this year is likely to be the $200 million business of SEAT, the troubled Spanish automaker responsible for parent VW's $1 billion loss last year. Now split between BBDO Europe and Ayer Europe, the account will go this month to BBDO or to Ayer, pitching with Casadevall Pedre¤o & PRG, Barcelona, rather than its own incumbent agency, Tapsa/N W Ayer.

Dagmar Mussey, Debbie Klosky, Bruce Crumley and Laurel Wentz contributed.

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