Battered Detroit Puts on Bright Smile for Auto Show

Monday, 11 Jan 2010 08:48 AM

 

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DETROIT, Michigan – A diminished Detroit auto show is expected to shed its traditional theatrics as it opens in the Motor City Monday, with badly battered automakers working to make more out of less.

Much of the glitz and glam will be gone from the press preview days as automakers cut back their marketing budgets in the wake of a collapse in sales to levels not seen since 1983.

But the overall mood is significantly more upbeat than a year earlier when the very existence of General Motors and Chrysler was in doubt as Congress sparred over providing billions in emergency loans.

While the restructuring of GM and Chrysler under bankruptcy protection was extremely painful, it has left Detroit in a much stronger position, GM vice chairman Bob Lutz said Sunday.

"I'm genuinely optimistic about the future," Lutz told the Society for Automotive Analysts' annual conference.

The Detroit Three, which also include Ford, have dramatically reduced their fixed costs after years of painful cuts and Lutz said GM's balance sheet is in the strongest position in decades.

"Detroit, the American auto industry and the Detroit auto show are going to experience in the next three to five years a prestige renaissance," Lutz said.

"It is kind of the phoenix rises from the ashes because this is the first time when we can deploy the full power of GM without the burden of all those horrible legacy cost and the crushing debt load that's all gone now. Now we're under a new ownership and a much, much healthier company."

GM's new owner - the US government which holds a 60 percent stake - will have a substantial presence at the show.

Transportation Secretary Ray LaHood is hosting a press conference before the show opens on Monday and House Speaker Nancy Pelosi will speak to the press at the end of the day after touring the show with a Congressional delegation.

They will see a strong emphasis on small cars and fuel efficiency, with a 37,000 square foot display of 20 different electric vehicles which they can test on an indoor track.

There will also be plenty of luxury vehicles on display despite the poor economy and a host of trucks and sport utility vehicles to tempt consumers who aren't as environmentally conscious.

"Despite the poor shape of the domestic auto industry, we do see some signs of hope from the Big Three," said Cars.com Editor in Chief Patrick Olsen.

"A string of model introductions and redesigns could bring them back to solvency and beyond if done well -- or mean disaster if they don't win over consumers."

There is no doubt that 2010 will be a challenging year and the competition will be fierce.

Most analysts are forecasting a moderate rebound in US auto sales to between 11 and 12.5 million vehicles this year after dropping to 21 percent to 10.4 million vehicles in 2009.

But that will still be drastically below the 15 to 17 million vehicle range posted in each of the previous 15 years and sales could be sharply hit should the economy take another bad turn.

The Detroit Three - which held a 60-percent share of the US market as recently as 2004 and a 70 percent stake a decade ago - ended 2009 with a 44.2 percent stake.

Asian automakers captured a 47.4-percent share in 2009, up from 44.6 percent in 2008, Autodata said.

"It's still a market suffering and trying to recover," said Karl Brauer, editor in chief of the automotive website Edmunds.com.

"Everybody's think we've hit bottom but nobody expects to get out" quickly.


© AFP 2014

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