The trade fair has opened under a cloud this year, under pressure from the
lingering impact of Volkswagen's massive "dieselgate" pollution scandal,
weaker international demand and a growing anti-car environmental movement.
Even as it unveils a flurry of new electric models, the mighty German auto
industry has been on the defensive in recent weeks and months over safety and the environment.
Meanwhile media and politicians have debated the safety of SUVs this week, after four people, including a three-year-old boy, were killed when a driver mounted the pavement on a central Berlin street.
READ ALSO: Berlin horror crash prompts growing calls to ban SUVs from city centres
At her opening speech, Merkel vowed to support the vital car industry through "revolutions" in climate protection and digitalization, but warned firms must themselves develop new technologies and win back lost trust among the public.
"I believe it would be a mistake to think we could come up with state
subsidy programmes that will match the innovations of the coming 10 years" in reducing CO2 output, Merkel said as she opened the biennial IAA car show in Frankfurt.
"You still never know quite how revolutions are going to turn out, and
that's why we must organize them in as evolutionary a way as possible," she added.
Once feted as "climate chancellor" for pushing forward Germany's "energy transition", Merkel is on the back foot on environmental issues.
After successive hot summers, car industry scandals like "dieselgate" and
months of "Fridays for Future" demonstrations, the ecologist Greens party now poll within striking distance of Merkel's centre-right CDU.
She has already begun adapting her rhetoric to address the new challenge.
"If we push forward on climate protection, it will cost money. This is money well spent," she told parliament as she opened a debate on the 2020 budget in Berlin Wednesday.
"Doing nothing is not an alternative."
The federal government plans to announce a new package of climate measures on September 20th.
'Our future is electric'
One lever flagged by politicians is a price on carbon dioxide (CO2) emissions -- the "correct approach", Merkel said Wednesday.
But German leaders fear echoing the "yellow vests" mass protests that disrupted France last autumn, triggered by a fuel tax increase that Paris justified with environmental concerns.
The "dieselgate" scandal, in which Volkswagen admitted to cheating emissions tests on 11 million vehicles worldwide, has already unsettled diesel drivers.
They fear exclusion zones in major city centres, which the federal government is scrambling to avoid.
Meanwhile car firms face pressure on their wallets from incoming EU regulations.
From next year, vehicles must on average emit no more than 95 grammes of CO2 per kilometre -- on pain of a fine of €95 for each gramme over the limit per car sold.
That has prompted manufacturers to unveil a string of new "zero emission" electric vehicles, including Volkswagen's "ID.3" at the IAA.
READ ALSO: 'Car for the new era': VW unveils zero-emissions vehicle
The new ID.3 displayed Monday in Frankfurt. Photo: DPA
"Our future is electric, fully networked and CO2 neutral," Volkswagen brand chief Ralf Brandstätter told AFP Tuesday.
Industry expert Stefan Bratzel nevertheless warned that "the success of e-mobility as it ramps up in the market has a lot of pre-conditions, and cannot only be achieved by manufacturers" -- highlighting the role of governments.
He underlined especially the charging infrastructure for battery-powered vehicles, which remains sparse despite subsidies from the transport ministry.
Meanwhile a shrinking global car market, undermined by trade conflicts, is squeezing carmakers' resources for tackling such problems themselves.
German carmakers' quest for fatter margins has pushed them into offering ever more models in the profitable SUV class.
The polarizing urban monsters now account for the same market share -- 20 percent -- as compact cars like VW's Golf, sharing the top step on the sales podium.
"The money we'll earn from SUVs will allow us to face up to the future," Brandstätter forecast.
But after Friday's deadly accident in Berlin, there have been calls to ban the cars from city centres on safety grounds.
On the European NCAP safety test, the Porsche Macan -- the SUV involved in Friday's crash -- scored 60 percent for pedestrian protection, compared with 71 percent for the Opel Corsa compact car or 91 percent for Mercedes' CLA coupe.
"Tank-like cars like this don't belong in the city," said Greens mayor Stephan von Dassel after the crash in his Berlin-Mitte district.
Porsche chief executive Oliver Blume responded that "one could consider whether SUVs are the right vehicles in Germany cities," but "customers must decide in the end".
SUVs are "a monstrous status symbol for some, and a monstrous image of the enemy for others," commented Die Welt newspaper.