One of the world's most prestigious auto shows opens on Sunday in Detroit even as US car sales crash and the industry skids to a halt. General Motors, Ford and Chrysler are struggling to survive, like the smaller companies.
AFP - The US auto industry hosts its premier auto show next week under a cloud of uncertainty as sales crash and General Motors, Ford and Chrysler struggle to survive as radically smaller companies.
A financial crisis, credit crunch and deepening recession pushed 2008 US sales down 18 percent in the steepest decline in 29 years to levels not seen since 1992.
This year is expected to be even worse with US auto sales forecast to fall by another one or two million vehicles to around 11 to 12 million vehicles.
Sales have not been below 12 million since the recession of 1982 when there were about 70 million fewer drivers on the road.
"It's going to be a pretty somber show," said Rebecca Lindland of IHS Global Insight, which forecasts US auto sales will drop by 7.5 percent to 12.2 million vehicles in 2009.
"We're coming off one of the worst years in decades and it's not as if 2009 is going to be much better. It's going to be less about the products and more about how Detroit is going to get through 2009."
While nearly every automaker posted significant losses and has announced major production cuts last year, the Detroit Three were the hardest hit and saw their combined US market share fall below 50 percent for the first time.
Their US market share topped 60 percent as recently as 2004 and was 71.2 percent 10 years ago, according to Ward's Auto.
Despite years of painful restructuring which had the trio on the road to recovery, the US government was forced to extend billions in loans to cash-strapped GM and Chrysler last month after sales dropped off precipitously in September.
Analysts warn that the loans could simply serve to postpone a collapse if the automakers can't lure more buyers into their showrooms.
The glitz and glam of the Detroit auto show has served as a major marketing boon in the past as automakers introduce new models and test reactions to the concept cars of the future.
Some 58 new models -- including 44 worldwide debuts -- will be introduced this year as automakers vie for the attention of nearly 7,000 journalists from over 60 countries at press previews on Sunday and Monday.
Notably absent will be a number of automakers which decided to skip the show altogether this year, including Nissan, Suzuki, Porsche, Ferrari, and Land Rover.
And the pageantry of past years -- like when Chrysler smashed a Jeep through a plate glass window and drove 100 longhorn cattle through the streets of Detroit -- is expected to be radically toned down as budgets are slashed in the face of bleeding balance sheets.
"There will be some significant product introduced," said Tom Libby, an auto analyst with JD Power and Associates, which forecasts US auto sales will fall 13.6 percent to 11.4 million vehicles in 2009.
Toyota is introducing a redesign of its popular Prius hybrid and Honda is unveiling its all-new dedicated hybrid hatchback, the Insight. Ford is also expected to announce plans to develop an electric car.
GM's Cadillac is introducing an updated version of its SRX crossover sport utility vehicle. GM's Chevy will also show an updated midsized SUV, the Equinox, while Ford will unveil a more stylish version of its midsized sedan, the Taurus.
"Whenever you come out with a redesign there is a short-term spike in dealer traffic," Libby told AFP.
But that may not necessarily lead to a significant boost in sales, he warned.
"The consumer right now has pulled out of the market and is scared," Libby said. "We have to have stability in the overall economy and we have to get away from banner headlines about the Dow plunging so the consumer can slowly regain confidence."
The North American International Auto show opens with a press preview on Sunday and some 700,000 people are expected to attend by the time it closes on January 25.
Date created : 2009-01-09