Global Investing

Autoweek names Audi, Cadillac concepts best in Detroit show

Volkswagen, General Motors and Ford walked away with “best in show” recognition from Autoweek magazine for their cars at the Detroit auto show.

Autoweek cited VW’s Audi Sportback concept (right) as “best in show,” with editor Dutch Mandel citing the car’s “stylish looks.” He predicted a production version would hit showrooms by the end of next year for the unanimous decision.

The “best concept” was GM’s Cadillac Converj, a luxury concept version of the Chevrolet Volt all-electric concept introduced two years ago. GM plans to begin selling the Volt by the end of next year. Ford’s 2010 Taurus car was voted “most significant,” while the U.S. automaker’s 2010 Mustang Shelby GT 500 was named “most fun.”

(Photo/Reuters)

Recession or depression?… “I’d rather not”

Here’s a blog post by my colleague Nick Carey.

This year’s roundtable event for the Society of Automotive Analysts (SAA) — held on the sidelines of the Detroit auto show — was always likely to be a somber affair, what with the U.S. economy in recession and auto sales falling off a cliff.
 
But even though the outlook for the sector this year is grim, analysts and other attendees in the half-empty room managed a few gallows-humor laughs.
 
“I see we have a few empty pews here,” Finbarr O’Neill, president of automotive forecasting firm J.D. Power and Associates (left), said to a few chuckles.
 
Many analysts have moved on since last year’s show, either because the firms or banks they worked for have gone belly up, or because their employers no longer feel the need to cover the U.S. automakers when their stocks have performed so poorly.
 
Even though the SAA rented a much smaller conference room at the Renaissance Center in downtown Detroit — also home to the headquarters of General Motors — than for last year’s event, there were nonetheless quite a few vacant chairs.
 
O’Neill proceeded to tell a joke about an Irish bank robbery — prefaced with the fact that he is himself of Irish heritage — and explained to the audience that the reason he was telling it was that they would need to keep laughing despite the awful auto sales outlook that he delivered. J.D. Power expects that U.S. auto sales in 2009 will be the worst since 1982.
 
“Let’s maintain our sense of humor folks. We’re going to need it.”   
 
But much of the laughter was at unintentional gaffes.
 
In the introduction for Paul Taylor, chief economist at the National Automobile Dealers Association (NADA), one of the hosts said the NADA had 2,200 members before correcting that figure to 22,000. Chuckles greeted the mistake, because the NADA is losing members at quite a pace.
 
The NADA says there were 700 fewer U.S. car dealers at the end of 2008 than at the beginning and expects there to be 900 fewer dealers still by the end of 2009.
 
But one of the biggest laughs was reserved for a comment from Ford’s senior economist Emily Kolinski Morris (right) in a Q&A session after she and Taylor spoke.
 
A member of the audience asked whether Kolinski Morris and Taylor would described the current U.S. downturn as a recession or a depression.
 
Kolinski Morris paused, for just a moment.
 
“I’d rather not,” she said, to widespread laughter from the audience. 

(Photos/J.D. Power and Ford)

Top quotes from the Detroit auto show

Top automotive industry executives gathered at the media preview for the Detroit auto show. Following are some of the notable quotes:
    
MIKE JACKSON, CEO, AUTONATION

“I have seen a better mood at funerals,” he told Reuters TV.
    
IRV MILLER, GROUP VICE PRESIDENT, TOYOTA MOTOR SALES USA

“Last summer’s $4-a-gallon gasoline was no anomaly. It was a brief glimpse of our future.”
        
BOB NARDELLI, CEO, CHRYSLER (left)

Autoextremist.com sizes up Big 3 at Detroit auto show

Reuters interviewed Peter DeLorenzo, publisher of website Autoextremist.com during the Detroit auto show. Highlights follow:

Q: What kind of shape do you see the U.S. automakers in?

– Ford

“Ford is clearly distancing themselves from what I now refer to as the old Detroit two.”
       
– GM
   
“There’s kind of a Jekyll-and-Hyde thing going on with General Motors.”
   
Chrysler

“I call it the dead car company walking. There are too many serious problems hovering over Chrysler right now.”
    
“The suppliers are starting to make contingency plans for a world that doesn’t have Chrysler in it.”
    
“I just don’t see them surviving the year.”
    
“If the economy doesn’t start to show signs of life, I don’t think Chrysler can keep the whole thing afloat.”
    
Q: Are electric cars finally going to be a reality given the time lines announced at the show?
    
“Will electric vehicles be a part of this nation’s fleet in the future? Absolutely, but I don’t think they will ever be more than 25 percent. Hybrids will be a strong player going forward.”
    
Q: Will those time lines put the U.S. automakers under greater pressure, however?
    
“Being put under the microscope in Washington just opened a Pandora’s box of attention on the Detroit automakers.”
    
Q: Will luxury auto market suffer even more than the overall market in the recession?
    
“I don’t think there’s any question that the availability of incentivized leasing programs allowed people to get into vehicles they couldn’t normally afford.”
    
“A shakeout is coming. It’s probably going to hit import manufacturers really hard.”
    
“It (the luxury segment) will still exist, but I think it will be at a reduced level and stay there for a while.” 

Cars the stars at Detroit show, not lavish displays

Reeling from crisis and in hock to the federal government for $13.4 billion, General Motors spent only about half of what it normally spends on its display at the Detroit auto show this year. There were no pyrotechnics, no marching bands, no celebrities, no models.

But GM Vice Chairman Bob Lutz surveyed the stripped-down display and found plenty to like in the new austerity.

“When you are really under severe financial stress and you have loans that you know that you are going to repay you start looking at what’s really important,” Lutz said.

40-plus MPG possible for next generation Ford Focus

Ford’s next generation Focus, due to land in the U.S. next year, could get 43 miles per gallon on the highway, more than 20 percent better than the current version.

Ford tipped that potential mileage at the Detroit auto show with its introduction of a Lincoln concept car (left). The concept is built on the same platform as the next generation Focus and equipped with a four-cylinder EcoBoost engine the automaker plans to offer on some versions of the Focus.

“We haven’t announced the powertrains yet on the next generation Focus, but it certainly gives you an indication of what the powertrain might be and what the fuel economy might be,” Ford product development chief Derrick Kuzak told Reuters.

Chinese automakers not so lost in translation anymore

Competitors in the U.S. auto sector the last few years have had reasons to snicker at Chinese automakers when they appear at the Detroit auto show, thanks to horrible translations in advertising handouts that might lead, for example, consumers to believe a Chinese car could catch fire in cold weather.

Those days are fading, however, as this year’s brochures were light years better than years past.

Brilliance Auto had only one glaring error, referring to its luxury sedan as emanating “Oriental mystic” instead of “mystique.” Of course, someone needs to tell the translators about political correctness as “Oriental” is not a word that is commonly accepted in America anymore for reference to Asia.

GM offers high-end possibility for electric car

Don’t put any money down for a high-end electric car just yet. 
     
General Motors has no current plans to make the Cadillac Converj (right), a luxury concept of the Chevrolet Volt plug-in electric car that was introduced at the Detroit auto show, said Mark McNabb, North American vice president of Cadillac/Premium Brands. 
     
GM Vice Chairman Bob Lutz said during the show the Volt remains on track to launch by the end of 2010. Showing off the Converj, Lutz said GM is confident enough about the Volt technology that the company can start looking at Volt derivatives. 
     
The Volt, which is being designed to run for 40 miles on battery power alone, will not be profitable until battery costs drop and one way to do that is to increase volume on the model. Offering the Converj would help, while also attracting higher profit margins. 
     
However, if the U.S. automaker decides to move ahead on the well-received Converj, a production version could look close to the concept, McNabb said. 
     
“It was done more to measure a little bit how the luxury market would assess ‘green.’ It is what it is. It’s just really an exploration into green versus luxury - can it be done and all that.” 
     
McNabb pointed out the Converj is based on existing technology. 
     
“It’s not like a pie-in-the-sky concept where you can’t build it or it’s years and years before you could. It’s more a concept of ‘let’s measure how luxury will accept this type of vehicle.’” 
     
(Photo/Reuters)

Take a ‘green’ drive in the basement

Reuters correspondent Nick Carey visited the lower level of the Detroit auto show, where smaller carmakers used to set up shop but there is something new for the automotive media this year:

 

The basement of the Cobo Center has been reserved for Chinese automakers in recent years, but thanks to the state of the U.S. economy and slumping auto sales, cancellations by other automakers for the 2009 auto show have left a fair amount of space to be filled.

 

The Michigan Economic Development Corporation (MEDC) came up with a novel idea to fill the room – creating a park (pictured above) to test drive ‘green’ hybrid vehicles.

Intellichoice.com editor sizes up U.S. auto market

Reuters spoke with James Bell, editor of the website Intellichoice.com, a website that allows consumers to compare the cost of ownership on vehicles. Highlights follow:
    
Q: What kind of shape are the U.S. automakers in?
 
General Motors
 
“What was incredible for me was during the Senate hearings, how that company was forced to kind of drop their pants and show an ugly side that maybe they were hoping to kind of keep hidden, but I think the company is going to be better for it.”
 
“Everyone needed to get over the fact that they’re not No. 1 anymore. It’s Toyota.”
 
“There’s still a sense of ‘Why would I buy a GM or Chrysler when I can rent one?’ and that’s a bad spot for them to be in. To the general consumer there’s still a big gap.”
      
Ford Motor – 
 
“Ford go a lot of credit for not going to the (government bailout) well, but that’s only because they already mortgaged their future.”
 
“They’ve done a nice job of distancing themselves from the other two, but it’s not because they’re doing so well. It’s because they’ve already paid the piper, so to speak.”
 
“From a product perspective, they need to make a ton of noise about their hybrids because Toyota has done a fine job of positioning themselves as a hybrid-green-efficient company while they were still pushing Tundras and Sequoias. Whereas General Motors or Ford is seen as an SUV and pickup truck company who had a couple green cars on the side.”
 
“That could be a perception gap closer because I think in a lot of consumers’ minds a company that can do a hybrid well can do a gasoline standard car very well, and Ford’s doing hybrids very well now.”
    
Chrysler –
 
“Their product line is awful. It’s unfortunately true and I’ve driven them all and I’ve tried to find the rose among the thorns and I can’t.”
 
“The (Chrysler) brand is kind of damaged goods now. Dodge still has some equity as being more of a budget, fun, little more of a spirited brand, probably younger skewing as well. Jeep has equity beyond belief. I just think the Chrysler brand is falling into a Plymouth trap of being somewhat irrelevant.”
    
Q: Is the Chevy Volt all-electric car (pictured at LA auto show in November) a potential game changer for GM?
 
“Probably not as much as they would hope because it’s going to be expensive and it won’t be on every street corner like a Prius is in certain cities. The Volt … better arrive at the end of 2010. I don’t think it’s going to bring them the big wave that Prius did for Toyota. It will definitely help, but it’s more a matter of you have to do it just to keep in the game.”
 
“I don’t think consumers are going to shy away from those products because a lot of people got burned pretty hard driving that Yukon and finding out that the ATM card would only let you go up to $75 at the fuel pumps.”
 
“If they put a date on something and they don’t deliver, they’re really going to be done in the public’s eye.”
    
Q: How will the luxury auto market be affected by the recession and has easy credit goosed that market up to now and it will inevitably fall off?
    
“Easy credit has been goosing that market for years as is the leasing business. That really allowed people to drive a vehicle that’s way beyond their means.”
 
“BMW, Mercedes, Lexus, they can weather the storm and I think what they’ll probably do is right-size the business. We are going to a period of austerity for a bit where somebody goes shopping for the Lexus and realizes, ‘We’re really more of a Toyota Avalon household’”
 
“Luxury is going to be defined a little differently going forward. It’s not going to mean the mega V-8 engine with leather everywhere and killer sound system. It might mean efficiency, but with niceties.”
    
Q: What do younger buyers want?
    
“I don’t think (customization) is going to be the Holy Grail. It’s going to be solid product with plenty of creature comforts at a fair price as well as a strong image perception.”
    
Q: What other factors will be important in the overall sales market?
    
“The car business isn’t going to dry up. They still need to get cars. They’re just going at it from a much more rational way. Resale value is going to become a very big factor in people’s purchase decisions.”
  
“There’s just going to be more of a rational look at things and not just going for that new car smell all the time.”
    
(Photo/Reuters)