Auto-makers are spending more money on glitzy, state-of-the-art exhibits at the North American International Auto Show in Detroit — something organizers of the annual event believe is a good sign for the industry as well as the economically embattled city and region, The Associated Press reported.
Many of the displays being erected this week at Cobo Center are larger than in past years, according to auto show co-chair Bill Perkins who helped lead reporters Wednesday on a tour of the venue, which also got a face-lift of its own for this year’s gathering.
“When they come to this show, they’re coming with their ‘A’ game,” said Perkins, owner of General Motors dealerships. “It’s a very competitive environment right now. The market is starting to come back. Detroit needs to shine. Everyone wants to make sure we have a good showing this year.”
The Detroit auto show begins Monday (Jan. 10) and runs through Jan. 23. It opens to the public Jan. 15.
It follows a strong 2010 for U.S. auto sales, which rose for the first time since the recession. New car and truck sales came in last year at 11.6 million, up 11% from 2009. December sales rose to 1.14 million, an 11% leap from a year earlier.
“It’s an exciting time,” said Scott LaRiche, vice president and executive manager of Lou LaRiche Chevrolet. “It’s almost like a resurgence of Detroit. When you have Chrysler and GM and Ford in this town, it’s very important to shine with this show. So many people from around the world are looking in on this.”
Porsche, which missed the last three shows in Detroit, is returning this year.
“Having Porsche back is validation that the North American International Auto Show is the place to get your message out in North America,” said auto show chair and Meade Lexus President Barron Meade.
Organizers expect a continued increase in the auto show crowd, as people feel better about the economy and vehicle sales rise. Attendance last January was just over 714,000, a jump of about 65,000 over 2009, according to show spokesman Sam Locricchio.
The auto show “remains the Super Bowl event for the local economy,” according to David Sowerby, portfolio manager for the Loomis, Sayles & Co. investment firm.
Sowerby estimates the economic impact of the show at between $375 million and $400 million. “It will be a meaningful improvement from a year ago levels,” he said.
Auto show officials estimated last year’s economic boost for the region at $325 million.
Whether Detroit will keep hosting the event in the long term has been in doubt. Organizers have complained that the aging convention center needs improvements and more floor space for the auto show to stay competitive. Oakland County pushed to move it to the Detroit suburb of Novi, about 20 miles northwest of Detroit.
But a regional board, which took over Cobo’s operation from the city of Detroit, has pumped about $3 million in upgrades to the venue, including $400,000 to repair leaks in the building’s roof. About $1.5 million was spent on electrical upgrades, which makes it easier for vendors working on sets for the auto show.
A 25,000-square-foot expansion also is planned for the 2012 show.
If there was one thing conspicuously absent in the launches and unveilings at this year’s North American International Auto Show, it was trucks.
For many automakers, the big news this year was small cars. Ford Motor Co., General Motors Co. and Chrysler Group LLC offered up new compacts and subcompacts, as did many of the foreign automakers, according to The Detroit News.
A number of factors are driving this push toward smaller vehicles: changing demographics, a weak economy, fear of oil price volatility and new government regulations. But with so many placing big bets on small cars, some analysts wonder whether automakers are chasing the market or getting ahead of it.
“The compact car segment will continue to grow,” said Erich Merkle of Autoconomy.com in Grand Rapids. “But the rate of growth won’t be enough to accommodate all the new competitors and products.”
Ford CEO Alan Mulally said Ford’s entries into the domestic small car market are aimed at balancing a lineup that for too long was dominated by big pickups and sport utility vehicles.
“Some people perceive that we are making a big bet on small vehicles. I’d say we are reducing the risk to Ford Motor Co. by having a complete product line,” he said. “We’re the ones that chose to focus on big SUVs and trucks because we didn’t have a competitive cost structure … I want to give the consumer a fabulous choice in every vehicle size.”
That said, Ford’s market research shows that U.S. consumers are increasingly interested in smaller, more fuel-efficient vehicles. Mulally said most Americans know that fuel prices will rise again and want to insulate themselves from that risk as much as possible.
But demographics also are changing. The two biggest customer groups today are Baby Boomers, many of whom are downsizing, and young people who do not yet need the hauling capacity of a larger vehicle. Mulally said both of these groups are willing to consider smaller models — provided they can get the same comfort, features and safety they have come to expect from larger vehicles.
Other automakers agree that fuel economy has become an important purchase consideration.
Tom Stephens, GM’s vice chairman of global product operations, said the world’s oil production cannot keep pace with increasing demand, particularly as the United States and other nations emerge from the recent recession. That will prompt an inevitable rise in gasoline prices, fueling increased demand for more efficient models.
“In the future, consumers will have a need for smaller vehicles,” Stephens said, adding that GM’s new compacts and subcompacts are aimed at meeting this growing need.
Sergio Marchionne, CEO of Chrysler and its new Italian parent company, Fiat SpA, agreed that there is an opportunity to sell more small cars in the United States.
But he said Americans will always want bigger cars than their European counterparts.
“You shouldn’t equate gas prices with size of car. One has to do with the efficiency of the systems that drive these vehicles and that’s one thing that needs to be addressed as a separate issue in terms of the efficiency of the powertrains,” Marchionne said. “I know that in Europe 50% of the market is C-segment and below, but that’s Europe. We’re not going to turn Americans into Europeans. It just won’t work. Distances travelled are totally different. Let’s not confuse them.”
David Cole, chairman of the Center for Automotive Research in Ann Arbor, said it is important not to read too much into the prevalence of smaller cars at this year’s show.
“There obviously is a lot of attention on fuel economy right now, because that is what everybody is talking about,” he said referring to the tougher fuel efficiency standards enacted by the federal government.
“Next year, I don’t think it will be about small cars. It may be about midsized cars or even large cars. Because the intent of the law is not to force people into small cars, but to have all cars become more fuel efficient.”
Now you see ’em, now you don’t.
That may be the subplot of this year’s North American International Auto Show underway in Detroit, as some brands and key models go missing after a year of industry turmoil. And the shakeout isn’t over, according to The Detroit News.
Pontiac and Saturn are gone for good. Saab is being wound down. And Hummer was a last-minute no-show.
The absence of several other automakers, the emergence of social media as a roll-out device and product cadence at others has created a lengthy list of cars and crossovers that auto show visitors, unfortunately, won’t be able to view. A look at some of the vehicles missing in action:
- The redesigned 2011 Jeep Grand Cherokee SUV is the most notable no-show. Chrysler LLC actually unveiled it last year at the New York Auto Show, but has pulled it from subsequent auto shows. Chrysler’s sales are in a slump, and the company’s new management doesn’t want any more reasons for consumers to postpone a purchase of the current Grand Cherokee. So look for the new Grand Cherokee to resurface just before it goes on sale this fall. The 2011 Grand Cherokee will be more crossover-like and feature Chrysler’s new flex-fuel Phoenix V-6 engine. The 3.6-liter engine puts out 280 horsepower and 260 pound-feet of torque at 4,800 rpm. That’s a 33% bump in horsepower and an 11% boost in torque over the departing V-6. When paired with a five-speed automatic, it is also more efficient with an 11% increase in fuel economy.
- BMW AG has released images of the sixth-generation 5 Series sedan, but is waiting until the Geneva Auto Show in March to show it publicly. It shares styling and a newly developed vehicle architecture with the BMW 7 Series. It will debut with one eight-cylinder and one six-cylinder engine, and a 5-speed manual gearbox. BMW’s new eight-speed automatic transmission will be optional. The new 550i and 535i will go on sale this spring, followed by a 528i with a 3.0-liter in-line six with 240 horsepower.
- The 2011 Volvo S60 sedan was previewed in Detroit a year ago as a concept but won’t be formally unveiled until the Geneva show. In the meantime, the new S60 can be found on Facebook. It’s been downsized slightly to move further from the S80 flagship. And Volvo’s volume sedan is still a quintessential Volvo, with gads of safety gear, including pedestrian-detection technology. It applies the brakes if it detects you’re going to make unwanted contact with someone in the crosswalk.
- Porsche enthusiasts cringed when an SUV joined the lineup a few years back. And some are taken aback at the prospect of the Panamera — the first four-door Porsche ever. But when you are a boutique sports car maker, the only real way to grow is to creep into new market segments. Even when your family tree is growing to include Volkswagen AG’s multiple brands. And the Panamera still looks and drives like a Porsche.
- The redesigned Infiniti M sedan goes on sale in the first quarter and will be offered with a 3.7-liter V-6 or 5.6-liter V-8 engine. It remains the Infiniti flagship with a more spacious and luxurious interior. A gasoline-electric version of the M sedan will go sale in March 2011.
- Suzuki Motor Co.’s sporty Kizashi sedan has an attractive base price of $18,999 and loads of standard gear: a 2.4-liter high-output engine, eight air bags, push-button keyless start, dual-zone climate control, nine-speaker audio system with steering controls, electronic stability control and ABS, projector beam headlamps, power windows, doors and mirrors, and ambient and footwell lighting. It’s being pitched as an affordable alternative to the Acura TSX, Nissan Altima, even the Audi A4. Look for a V-6 and hybrid model down the road.
- The Mitsubishi Outlander Sport is a new compact crossover with a four-cylinder engine slotted below the Outlander but with a higher profile than the Mitsubishi Lancer Sportback. It will launch in Japan, where it’s called the RVR, followed by European and North American markets. Based on the Mitsubishi Lancer platform, the mini crossover will be about 170 inches long, or 14 inches shy of an Outlander.