Industry chiefs will be pinning hopes on new product offerings and design innovation to inject fresh momentum into sales at a time when Asian export markets have collapsed and fears grow over a slowdown in the key European and US regions.

The show will include 12 world debuts led by the S-TypeJaguar and Rover R40 cars.

Despite the scope for concern, Britain's Society of Motor Manufacturers and Traders (SMMT) said that the industry was optimistic about the reception for new offerings.

"The UK industry is hopeful, based on new product launches which should drive forward sales together with innovation in design," said Al Clarke, spokesman at the SMMT.

Over 300 exhibitors will be attending the show at Birmingham's NEC centre, with companies from 30 countries. The show is expected toattract around 600,000 people.

But away from the glitz of new launches, the industry will also be seeking to grapple with longer term issues of competitiveness.

That issue will be addressed at a conference on Wednesday, chaired by trade and industry secretary Peter Mandelson, with major industry chiefs in attendance.

Among the issues up for discussion will be how to create a leaner cost base, forging better links with key suppliers to combat tougher markets and the issue of industry consoldiation.

On the exhibition forecourt, the spotlight is likely to be focused on two British-based manufacturers debuting cars which will be key to their future profitability.

From the Ford Motor Co stable will be the new S-TypeJaguar, which is being billed as a likely success story.

Also taking the world stage will be the R40 model from RoverGroup, the troubled UK arm of Germany's BMW AG.

"If Jaguar is to realise its ambition for a 200,000 units operation and allow Ford to recoup its reward from investments,then the new Jag has to succeed.

The early indicators are that it is well placed," said Arthur Maher, head of European research at car analyst, LMC International.

"But the R40 is really up against it. Rover has to get the design right, it has to get the build quality right. If the R40 doesn't meet BMW's volumes and expectations then it may throw up questions about its commitment," he added.

Rover in particular has had a tough year, hit by a combination of strong sterling, dried up export markets and a lower level of productivity compared to other UK carmakers.

But even the most productive players face a flat to contracting UK market in 1999, say analysts, as the domestic economy slows and fears of a wider slowdown remain.

Analysts such as LMC, part of J.D. Power Group, say the European market could contract by up to 200,000 units in 1999 out of the 14.1 million units expected to be sold this year.

In the UK market, the SMMT has downwardly revised its UK car registration forecast slightly to 2.18million units, compared to 2.17 million in 1997.