Every year, the North American International Auto Show is the biggest auto industry event in Detroit. And the blue-collar city and its hometown carmakers pull out all the stops to promote themselves and dazzle American consumers with new vehicles.
But at the NAIAS 2007, the Motor City and the traditional Big Three domestic automakers headquartered in the Detroit area have to work even harder.
More than 5,000 news media from around the globe will gather in an economically depressed Detroit , which has been hurt by job cuts and declining market share of local automakers like Ford Motor Co. and General Motors Corp. Yet, along the banks of the Detroit River, the media will hear top executives from overseas-based car companies like Toyota, Honda, Audi and BMW highlight the record U.S. sales that they had in 2006.
The stark contrast is difficult to ignore. In 2006, Ford suffered a big money-losing year and stridently rejected speculation about bankruptcy. Instead, the company got a new chief executive and said it would basically mortgage itself to borrow $15 billion.
GM?s U.S. executives used to wear lapel buttons touting their market share goals. But the lapel pins are gone as GM?s sales declined 8.7 percent in 2006 from 2005, and the automaker is busy cutting billions of dollars in costs. The company?s accounting practices continue to be investigated by the U.S. Securities and Exchange Commission, too.
Chrysler expects to lose some $1.25 billion for 2006 and has come under the scrutiny of its German parent, which dispatched its own people last year to the U.S. to study what was going wrong.
The uncertainty about the future of these traditional Big Three domestic automakers, plus the bankruptcy filings of major auto suppliers, has affected just about everything in the Detroit area, from housing prices and restaurant traffic to government planning.
Toyota Shines
2006 actually was a very good year for the auto industry in America. The 16.5 million vehicles sold in the U.S. puts the year among the 10 best in history.
But it?s not much comfort to Detroit. Toyota will be the talk of the auto show, because Japan?s largest automaker recently announced a 2007 vehicle production goal of 9.34 million. This puts Toyota on track to become No. 1 in world sales of vehicles, surpassing giant GM which has held the title since 1931.
Toyota already isn?t well-liked in the Detroit area. It passed Ford for the No. 2 worldwide spot in 2006 and passed Chrysler as the third-largest vehicle seller in the U.S. in 2006. Many in the Detroit area blame Toyota for taking away sales ? and jobs ? from the domestic manufacturers.
?Toyota is a juggernaut,? said a top executive at a competing automaker. His comment came with as much concern as admiration.
Serious Issues Weigh Heavily
The annual auto show at Detroit?s Cobo Center will surely be glitzy and festive. The big lights, glamour and playfulness are ingrained in an auto show where the companies vie to get the most and best publicity. The Detroit show also is the only one in the nation to be sanctioned every year by the Organisation Internationale des Constructeurs d'Automobiles, the Paris-based alliance of automotive trade associations and manufacturers from around the world.
For the first time, GM plans a high-energy, unofficial opening event this year where Hollywood types like actor Christian Slater and talk show host Jimmy Kimmel will share the spotlight with GM?s cars. GM already successfully tested this concept in the hard-scramble party-and-fashion town of Los Angeles, where the events are covered not only by auto press but by pop culture devotees such as Entertainment Tonight and Access Hollywood television shows.
But no amount of festivities and stars will disperse the worry of American auto workers in Detroit and Michigan. They cling to their jobs while knowing that later in 2007 they face critical labor negotiations with GM, Ford and the Chrysler Group on difficult issues that include health care benefits and job security.
The negotiations are bound to be made more sticky if analysts? projections of a slowdown in auto sales in 2007 turn out to be true.
Backdrop of Fuel Prices, Global Warming
And in another example of the conflicted nature of this year?s Detroit auto show, many stages will premiere new cars even as some major automakers continue to rely heavily on sport-utility vehicles and trucks for all-important profit margins.
The swing to new cars comes after rising gasoline prices as well as worry over global warming force some consumers to examine the kind of vehicles they drive and how much fuel they use. Despite recent leveling off of gasoline prices in the U.S., experts warn that because global oil demand is still high, prices can remain volatile.
The China Factor
Lastly, the 2007 NAIAS will be the second in a row to feature a Chinese carmaker.
Changfeng Group Co. will show four of its vehicles for the first time outside China. Two are pickup trucks, two are SUVs, and all are marketed under the Liebao name. None is expected to be on sale in the U.S. until the end of this decade, but Detroit workers have been nervous about the prospects of competing with low-cost vehicles from China.
Last year?s appearance of Geely Automobile Co. of China drew curious officials from other automakers and lots of news media, including CBS-TV?s 60 Minutes. Geely displayed two of its cars in the outer lobby of the auto show during the Detroit show?s media days.
But NAIAS organizers say Changfeng?s vehicles will remain on display during the Detroit show?s public dates, too. They?ll likely be both a curiosity and a worry for show attendees in America?s automotive heartland.
