The spectre of falling sales and rising steel and plastic prices hung over the European car industry as the Geneva Motor Show got under way in its centenary year.
Executives queued up to warn that sales in 2005 look set to fall away from last year's buoyant levels.
But they also stressed that the scope for reviving the market with showroom incentives was limited as production costs increase and margins shrink.
PSA Peugeot Citroen chief executive Jean-Martin Folz said intensification of price cuts and incentives that were the hallmark of the 2004 market was unlikely.
"I don't see increased price pressure, but things are likely to stay as they are," Mr Folz said yesterday .
PSA last week said its operating margins would, at best, remain stable in 2005 when it expects no real improvement in the European market but does foresee continuing pressure from material costs.
Both PSA and its French rival, Renault, have repeatedly said that in current market conditions they will focus only on profitable segments, unwilling to sacrifice margins to boost sales.
Bernd Pischetsrieder, chief executive of Volkswagen, Europe's biggest car company, is on record as saying that the group, which takes in Audi, Seat and Skoda, would not be slashing prices in order to chase sales.
Mazda, one of the Far Eastern manufacturers making big inroads into the European volume market, said it expected to see sales on the continent to slow this year.
Ford of Europe chief executive Lewis Booth said: "We are seeing signs of weakening in the UK. We see absolutely no sign of a recovery in Germany."
"We can't decide whether that is a trend or a temporary blip."
Such downbeat comments were linked to warnings that higher raw-material costs will
have impact on carmakers' earnings and add to the pressures caused by the strong euro and excess industry capacity.
The cost of steel rose by some 30 per cent last year and the industry is braced for further shocks in the wake of Japanese manufacturer Nippon Steel's revelation that it had agreed to pay a Brazilian supplier 71.5 per cent more for iron ore.
VW procurement chief Javier Garcia Sanz said it was too early to estimate the impact on the group's 2005 earnings.
"We will act to compensate for it, but it is still too early to say how far we will be able to do that. We are still in discussions with car parts suppliers and the steel makers about how far we can share the pain throughout the entire value chain," Mr Sanz said.
Meanwhile, manufacturers are looking to a tranche of new models, especially smaller cars, to keep them afloat this year.
For example, Toyota president Fujio Cho expects strong growth in the small-car segment as a result of three new models the company is developing with PSA and which are being built in the Czech Republic.
The cars, the Peugeot 107, the Toyota Aygo and the Citroen C1, are being unveiled at
Geneva and are expected to sell from about 8,500 euros (£5,821).
Helmut Panke, board chairman of BMW, maker of the Mini at Oxford, announced plans to develop two new BMW brand ranges, while unveiling further growth in sales in the first two months of the current financial year.
BMW's group unit sales year to date to the end of February was 160,000 units, up seven per cent year-on-year, he said.
Chief financial office Stefan Krause said the cars would be built in the US and Germany.
He added that the usual cycle of product development is at least three years, meaning the two models would not be ready before 2008.
They are new additions to the German carmaker's model lines and are not variants on existing models, Mr Krause said.