Detroit auto show revs up amid 'perfect' industry conditions

  • AFP, New York
  • Updated: Jan 12, 2015 10:33 IST

A surging economy, more jobs and cheap gas: the US auto industry will celebrate a confluence of near-perfect conditions as it unveils its latest wheels in the annual Detroit car show next week.

After racking up the best year in sales since 2006, the last year before the financial crisis hit, automakers will put out for display some 40 new car and truck models, hoping to seduce buyers to make 2015 even better.

The cars will be more powerful and decked out with ever-more high-tech bells and whistles that are making them safer than ever, while pushing slowly toward the day of the hands-free automobile.

Rolling onto the red carpet in Detroit will be Cadillac's most powerful car ever, the new 640 horsepower CTS-V; Lexus's GS F performance sedan; a brand-new version of the legendary Acura NSX; and possibly the next-generation Ford supercar.

Pickup fans will be wowed with the all-new Nissan Titan and Toyota Tacoma trucks.

The struggling green-car sector will also have badly needed fresh offerings in the form of a redesigned GM Volt, and Hyundai's hybrid and plug-in Sonatas.

The show, the premier auto exposition in the United States, will also see the return of Chinese makers, absent for several years after self-imposed exile, with Guangzhou Auto presenting a new car -- which will not be sold in the United States.

The impressive array going on display underscores how the American consumer is enjoying the richest, most diverse range of choices from the Detroit "Big 3" -- General Motors, Ford and Chrysler, now renamed FCA US -- and European and Asian producers.

With gas prices at their lowest in six years, interest rates rock-bottom, and the US economy and household worth growing steadily, "we're almost in a perfect storm," said Joe Vitale, industry analyst at consultant Deloitte.

"When you look at all those factors, one it's a good time to be a consumer, two there's liquidity out there for the purchase of vehicles, three there's aging of the vehicle population.

"All these things make it very desirable for the auto industry over the coming year."

- Not all good news -

The North American International Automobile Show -- to give it its full name -- expects a million visitors to descend on bone-chilling Detroit between January 17 and 25.

Some 20 manufacturers will compete for the spotlight in a US market that has been a bright spot in a world where other economies are struggling to grow.

The industry is coming off a year of sales of at least 16.5 million cars and trucks in the United States, up 5.9 percent from 2013, according to Autodata, an industry consultant.

General Motors led the pack with sales of 2.94 million units; Ford was second at 2.48 million, Toyota close behind with 2.37 million, and FCA US, the former American Chrysler marque now owned by Italy's Fiat, selling 2.09 million cars and trucks.

GM chief executive Mary Barra predicted Thursday that sales in 2015 could reach a buoyant 17 million vehicles, a level last seen in 2001.

"The US economy and vehicle sales have been rebounding since 2009 and we believe there is still plenty of room for the auto industry to grow," she said.

But for all the expected razzmatazz, the show does not open under absolutely clear skies.

After a record year of recalls in the US, some 60 million cars in total, many for life-threatening defects, automakers will be under pressure to demonstrate a greater commitment to car quality and consumer safety.

GM is especially under the gun, having been shown at the beginning of 2014 to have known about a faulty ignition for more than a decade before taking action.

At least 42 people died in crashes tied to that problem and the company is facing criminal investigation even as it pays out millions of dollars to settle claims.

The other cloud over the industry is the receding demand for energy-saving vehicles as gasoline prices sink. Sales growth overall has been heaviest in the pickup truck and sports utility vehicle segments, while sagging for electrics and hybrids.

Demand for such vehicles "has been somewhat disappointing for the auto companies," said Martin Zimmerman, a former economist at Ford and now professor at Michigan University.

With the companies under regulatory pressure to reduce the fuel consumption averages of their fleets, the lackadaisical demand for electrics poses a problem for them, according to Zimmerman.

Both automakers and regulators "are going to have to come to terms with these lower oil prices," he said.

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