Editor’s Note: The following is an excerpt from a Wall Street Journal piece on the revitalization of the auto industry. To view the entire article click here.
Sergio Marchionne strode around the cavernous design studio at Chrysler Group LLC last month inspecting a soon-to-launch new compact car, the Dodge Dart, and offered a bold idea. “We are going to try to grab some share” in the small-car segment, he said, puffing on a Marlboro.
Not so long ago, a Chrysler chief saying that might have been laughed out of the room. For a generation, the company and its two Detroit rivals, Ford Motor Co. and General Motors Co., all but conceded leadership of the passenger car business to Japanese rivals. While making pickups and sport-utility vehicles that Americans liked, Detroit produced cars that were often uninspiring and sometimes years behind on technology and quality.
Meanwhile, Toyota Motor Corp. and Honda Motor Co. built huge followings for their family-size cars and compacts—Camry, Accord, Corolla and Civic—and used that base to sustain a 30-year expansion in market share, pushing Detroit to the brink of collapse.
But today, there are renewed signs that Motown is back. The latest evidence of its revival will be on full display this week at the North American International Auto Show in Detroit.
After gut-wrenching restructurings—GM and Chrysler in government-backed bankruptcies, and Ford on its own—the Detroit Three are all making money. Instead of having to spend a lot on labor costs and retiree benefits, they are pouring money into engineering and designing cars that can go head to head with the best in the industry.
Armed with good-looking, fuel-efficient and technology-packed cars, Detroit’s revived auto makers insist they have a historic opportunity to strike back at their Japanese rivals and regain the upper hand in the North American auto industry.
Investors, however, aren’t fully convinced this time is different. Ford shares, which fell below $2 each in the dark days of 2009, closed Friday at $11.71, below the about $18.50 price it traded a year ago. GM shares, now trading at about $22.92, remain below its November 2010 $33 initial public offering price.
Worries that another economic slowdown could cut into global sales and concern that last year’s profits mostly were generated by SUVs and pickups continue to spook investors. SUVs and pickups are more profitable but an overreliance helped sink their business four years ago as fuel prices skyrocketed.
But within the auto industry, a new optimism is taking hold. “The resurgence of Detroit is real,” said Mike Jackson, chief executive of AutoNation Inc., a large dealership chain closely aligned with both Detroit and foreign auto makers. “The foundation is exciting new cars and the viable, sustainable business models these companies have put in place. It’s absolutely revolutionary for this town.”
VIA Motors unveiled what the company is touting as the world’s first extended-range, electric hybrid pickup at the North American International Auto Show.
As reported by the Detroit Free Press, the pickup has a 4.3-liter V6 combustion engine, which is used only when the batteries need charging, coupled with a 150-kilowatt electric generator, according to the company. The line of vehicles, called eREV, also boasts a 402-horsepower electric motor and a 24 kilowatt-hour lithium-ion battery pack, which provides up to a 40-mile range.
“This is the revolution. We call it the eRevolution,” said Bob Lutz, a member of VIA Motors’ board and the former General Motors vice chairman who has been dubbed the father of the extended-range Chevy Volt.
He explained that it makes sense for the electric sector to focus on the most-popular type of vehicle and the one that uses the most energy.
“Once you electrify, you will never go back,” Lutz said.
The vehicle also can be used as a power source, be it for a hair dryer on a camping trip, arc welding at a job site or helping out at a customer’s house during a power outage, according to Alan Perriton, VIA Motors’ chief operating officer and a former GM senior executive, who demonstrated how light the 108-pound engine was by lifting it.
VIA Motors also makes extended-range SUVs and vans.
The base price for the pickup is $57,000, according to company spokesman David West, who added that six have been sold, all to Pacific Gas & Electric.
2012 is “the year we say goodbye to our addiction to oil,” intoned the VIA Motors promo video that kicked off the company’s NAIAS news conference.
The cars — glitzy and sedate, grand and green — were back in the spotlight Monday (Jan. 9) as Detroit celebrated the industry’s comeback from grueling recession at the annual auto show here.
Yahoo News reported that the excitement was clearly in the air at the industry’s premier North American extravaganza, with US and foreign makers confidently launching new models and predicting growing markets in the United States and the big emerging economies — albeit with a cautious eye still on troubled Europe.
U.S. Transportation Secretary Ray LaHood opened this year’s show cheering the industry’s future, three years after two top U.S. automakers, General Motors and Chrysler, nearly died in the economic crash and the industry lost hundreds of thousands of jobs.
“As you look at these breathtaking vehicles, I ask you to remember they represent more than creative thinking and design,” LaHood said.
“They represent American factories bustling and humming, American workers churning out cars, and American families earning paychecks again.”
All three of Detroit’s carmakers are now back in profit, and last year regained market share from their arch-rivals, the Japanese producers, for the first time since 1988.
The Japanese were set back by the interruption of manufacturing from the devastating March 11 earthquake-tsunami disaster.
The deepest recession since the 1930s, and the controversial government rescues of the two — the third, Ford, barely scraped by — had held a cloud over the Detroit show since 2008, while the cars themselves got less attention.
But after a radical revamp of their product offerings and two years of steady growth in US sales, the Detroit Three are ready to fight, not only to hang onto their lead, but to expand it.
Ford opened with an all-new Fusion, unrecognizable from the past, which targets the dominance of Toyota’s Camry in the all-important if not sexy mid-sized market.
The four-door, estimated to cost around $22,000, comes in gasoline, hybrid and plug-in hybrid versions, all cloaked in distinctively European styling — done in America.
“What we wanted was a car that looked visually like a premium car,” said J. Mays, Ford vice president for design.
“I am proud that we came up with a world-class design here in Dearborn (Michigan).”
Chrysler revived its clunky Dodge Dart of years ago in a small slingback four-door entry-level car (read: $16,000) that will please young people hoping for a little sportiness from Chrysler’s Italian owner Fiat.
And GM’s Chevrolet unveiled two concept cars — the Code 130R and the Tru 140S — aimed at the younger market with a little more money than the Dart.
There was plenty on offer at the higher end of the market, with Porsche’s brand new Carrera, BMW’s shake-up of the 3 series, and all new Mercedes-Benz SL roadster which celebrates the classic car’s 60th anniversary.
The “premium” class makers were all confident that luxury car sales would continue to grow faster than the market overall.
“A disproportionate part of that growth will be the premium segment, and we intend to take the lion’s share,” Mercedes chief executive Dieter Zetsche said.
“I think we’ll see good progress… with consumer confidence rising here,” said BMW’s Ian Robertson, after selling 305,000 units in the US last year.
Green car fans were hardly being left behind. There were the hybrid Fusions, new producer Via Motor’s promise of electric pickup trucks, Volvo’s plug-in hybrid concept, new hybrids from Mercedes and BMW, and an electric van from Nissan along with Toyota’s popular and expanding Prius offerings.
Even with the confidence — which extended as well to opportunities in the major emerging markets like China, India and Russia — automakers recognized that competition was going to harden.
The Japanese need to rebuild U.S. market positions after the earthquake, and the Europeans need to compensate for the weakness in their home markets.
South Korean carmakers Hyundai and Kia — the big success story of the downturn, after winning over consumers seeking good value — will be working to keep up their momentum.
“There’s nothing like competing at the highest level to sharpen the best edge in people,” GM chief executive Dan Akerson said at a sneak peak of the latest Cadillac.
Via Motors will introduce a new electric-powered full-size pickup truck, 4×4 SUV and cargo van at the 2012 North American International Auto Show in Detroit on Jan. 10. Making the introduction will be Bob Lutz, former vice president of General Motors Corp. and called by some as the father of the Chevy Volt.
Pickuptrucks.com reported that the powertrain in the new Via eREV (which stands for extended-range electric vehicle) will work similarly to the Volt’s system. Lithium-ion batteries power the wheels for a full electric range of around 40 miles. When the batteries are low, a small onboard gas engine will start up and provide extended-range capability for the batteries, up to 400 miles using the onboard generator, averaging up to 100 mpg.
The system can be charged from either a 120-volt household outlet or from a more powerful (and quicker) 240-volt charging station. In addition, each Via vehicle will be able to generate 15 kilowatts of mobile power (at either 120 or 240 volts AC) for the home, work or emergency services.
For now, Via is buying GM ladder-on-frame platforms (Chevy Silverado 1500, Tahoe and Express), but in theory nothing prevents the powertrain technology from being adapted to another full-size truck chassis. In the future, the business model could work much the same way current motorhome companies buy platforms from various OEs depending on customers’ wants and needs.
Via began taking orders for 2012 for its extended-range electric pickup truck from many of America’s largest fleets. Production of the eREV pickup is scheduled to begin in 2012, with plans to ramp up production to 20,000 units per year over the next few years, including the eREV SUV, van and other large eREV vehicles.
Via plans to sell directly to fleets initially, then later to consumers. More info on Via Motors may be found at www.viamotors.com.