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Detroit ready for new era of autos
Question of the Day
DETROIT | After a tumultuous year, the auto industry’s gleaming new vehicles, equipped with the most futuristic technology, will be introduced for a global review at the annual North American International Auto Show, which opens Monday in Detroit.
The event, which draws close to 6,000 journalists and at least 55 company exhibitors from around the world, returns with tepid optimism to the Motor City. The Big Three automakers — Ford Motor Co., General Motors Co. and Chrysler LLC — have weathered a year of tense negotiations with the federal government, including rapid-fire bankruptcies and surgical realignment in one of the darkest economic periods.
Although the industry upheaval continues to be painful for many — including thousands of autoworkers who have lost jobs and retirement benefits — those left standing in the seismic shakedown are anticipating a leaner and greener business plan as failing brands fall to the wayside and new world leaders emerge.
“That ‘sky is falling’ mentality from last year is gone,” said Doug Fox, chairman of the 2010 show, who describes positive momentum in the auto industry as plans for the show move into full swing.
“We certainly have faced some challenges of the last year, but when you look at where we are now, versus where we were this time last year, we seem to be leveling out,” Mr. Fox said, as about 700 workers continued the arduous 10-week setup inside the massive Cobo Center downtown.
“We have reached a new place in our economy, and we are seeing major commitments from Ford, GM and Chrysler to show significant product announcements here and to make some business announcements as well.”
With an eye toward fuel economy, Ford will showcase its revamped Fiesta, a subcompact expected to challenge the Toyota Yaris and Honda Fit. The fuel-efficient Fiesta is touted at 40 mpg highway, better than the mileage for Yaris and Fit.
GM will feature its new Chevy Cruze, a compact built along the lines of the Cobalt. Industry buzz is focused on an optional 1.4-liter turbo engine, with speculation that it could reach up to 45 mpg, which would make it an attractive alternative to the Honda Civic and Toyota Corolla.
At the other end of the fuel-economy scale, but true to the auto show’s glitz, Chrysler will have on hand its limited-edition Viper Voodoo. Only 500 will be built for the last year of this model, a 10-cylinder sports car with 600 horsepower.
The auto show will help Detroit, which is suffering under crippling unemployment and fighting to move beyond several scandals related to city government, with an influx of an estimated $350 million to $500 million.
After some haggling, the City Council let stand a plan last summer that would renovate and expand the aging Cobo Center, formerly known as Cobo Hall, under an outside authority. The council’s action ensured that the massive auto show, for media and auto enthusiasts alike, would return to Michigan for another year.
“The 2010 North American International Auto Show will be a welcome oasis after a stormy and turbulent year in the automotive industry. I look forward to the conversations surrounding this year’s show to be about the vehicles and the great advancements being made by the American automakers in quality, design and green technologies,” Detroit Mayor Dave Bing said. “The show will also allow the city of Detroit to demonstrate that we are still open for business, and that Cobo Hall is in the process of renovation and improvements for the NAIAS and other conventions.”
The Cobo Convention Authority now manages the Cobo Center and has secured $280 million in funding for full expansion, which Mr. Fox expects to be complete by 2012. Roof leaks have been fixed, and new electrical connections were installed this year.
Auto show attendance fell from 800,000 in 2004 to 650,000 last year, but Mr. Fox said that number will easily hit 700,000 this month as support across the state increases.
Auto analyst Erich Merkle said the opportunity to showcase innovations signals hope for the city, regardless of whether the U.S. auto industry rebounds significantly.
“Of course you want to have the show in Detroit. There are so many things that Detroit needs — economically, they have lost so much, so it’s hard to make it up with just one auto show. But I think the overall psyche or emotional element of being able to have the show there, it’s a very positive thing, just from a subjective point of view,” said Mr. Merkle, who is president of Autoconomy.com.
He said automakers are realigning business for the new economy.
“I think the theme is really going to be about getting back to the basics and putting your best foot forward, showing off the product that is there to restore the company,” Mr. Merkle said. “I think the Detroit show is going to be a lot better than it was last year.”
Nissan and Mitsubishi return to the 2010 show after pulling out in 2009, as sales declines around the world hit records. Both companies plan to showcase new electric vehicles, which will feature a 37,000-square-foot “electric alley” area spotlighting greener innovations and new hybrid battery plug-in technology.
David Cole, chairman of the Center for Automotive Research, based in Ann Arbor, Mich., said he predicts a new tone for the 2010 auto show as the economy slowly begins to rebound.
U.S. automakers have reduced costs per vehicle in the past year by cutting so-called “legacy” costs of retiree and worker benefits that put them at a disadvantage compared with foreign competitors, he said. Those changes enhance their chances to rebound, even as concerns remain over fickle currency values and fluctuating gas prices.
“What we have seen in the auto industry is not a normal recession. This has been a depression … a catastrophe,” Mr. Cole said.
“I think what we’ll see at the show this year is the recognition that this industry is far leaner and prepared to be far more competitive for many years ahead,” he said. “I think we’ll see fairly dramatic evidence of … far more dynamic companies.”
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