THE Paris Motor Show had both vroom and gloom as it opened yesterday under the cloud of global financial turmoil.

Auto makers made bold sales predictions but unveiled smaller and more fuel-efficient cars to cater to consumers who are both cash-strapped and environmentally conscious.

Honda unveiled a new five-door gasoline-electric hatchback to challenge rival Toyota Motor Corp's success with the hybrid Prius. Honda said its Insight would be cheaper "than any other hybrid car on the market" to make the low-emission technology affordable for more consumers.

The Japanese auto maker aims to sell 200,000 of the cars each year, launching next spring in Japan, Europe and North America.

Renault showed off a revamped Megane compact hatchback. France's second-largest auto maker, which is cutting 6,000 jobs to maintain profitability, hopes the car will make up for poor sales of the low-cost Laguna.

The shaky economic outlook cast a pall over the glitz. "It's not good," Volkswagen Chief Executive Officer Martin Winterkorn said of the financial climate.

But car companies, with rock music and clouds of dry ice, still pulled the wraps off plenty of sleek models, testimony to an industry working to adapt to an era of expensive gas and mounting concerns about global warming.

The two-week auto show opens to the public tomorrow, after two days for media only.

Citigroup said that it expects 2008 to be the first year of volume declines since 2001 for the global car industry, and last month it lowered its outlook for this year and next year after double-digit declines in new car registrations in western Europe, the United States and Japan.

Audi, Volkswagen AG's luxury car subsidiary, said yesterday that it sold 95,000 cars in September - up 12.2 percent from the same month last year.

Over the first nine months of the year, unit sales were up 2.9 percent to 762,000. But September sales in the US were down 5.4 percent.

On Asian markets, shares of major Asian auto makers took a beating yesterday after they reported dismal September sales figures in the US, their most important overseas market.

Overall US auto sales plunged last month, dropping below 1 million for the first time in more than 15 years.