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Detroit: Automakers Back to Business. But What Business?
Detroit--The auto industry's heavy hitters are all back at work today, their interviews done. Not that they weren't working during the Detroit auto show; PR and publicity are necessary parts of any auto exec's job. Consumers have to be persuaded that the new cars are better, safer, cooler, and more relevant, while financial analysts and industry trades have to be given just enough detail with nothing that is off-message.
But what were the real messages of the show?
Between newly enacted CAFE regulations and tightening consumer credit due to the mortgage meltdown, forecasts for 2009 auto sales range from "a slight decline" to "pretty bad." Detroit's carmakers seem most apprehensive, but the decline in the value of the dollar has the Europeans scared too. Volkswagen is choosing a site for an upcoming U.S. assembly plant, with Audi and Volvo said to be not far behind. It's a shock to some that the U.S. is perceived as a low-cost country--but, hey, it's better than the alternative.
Obviously this year's theme was green technology, yet the two major launches at the show were the remodeled Ford F-150 and Dodge Ram pickup trucks, hardly the way to environmentalists' hearts. But bear in mind, those two trucks together sell more than 1 million units a year, so their profits are the ones funding all that green technology on the way.
Every automaker talked about its strategy for reducing fuel consumption, shifting to alternate fuels--E85, electricity, and occasionally hydrogen--and reducing the environmental footprint of its cars and its operations. It'll take some time to sort out which announcements will result in actual products and which are just "vaporware." But this year, as one reporter said, "it finally seems real."
Part of the urgency is looming global competition. For the biggest auto suppliers, the dozens of new Chinese automakers present an alluring new market. But there is fear that they have only a few years in which to sell their advanced technology, before the Chinese supply base catches up. So it was significant that this morning, Johnson Controls-Saft announced two contracts to supply advanced batteries to Chinese makers.
JCI-Saft is providing a complete hybrid battery system to Chery Automobile for the A5 ISG mild hybrid sedan it plans to launch by December. Highlighting the global nature of the car-parts industry, the nickel-metal-hydride cells will be made in France and integrated into a battery pack in China, based on development work done in the United States.
The second deal is with SAIC Motor Corporation, the largest Chinese carmaker. JCI-Saft will supply lithium-ion battery systems--the most advanced class--for a demonstration fleet of advanced hybrids that will be on the road within a few months. Those cells are made in Milwaukee...for now.
Meanwhile, the show floor has become pleasantly quiet. A second wave of auto-industry people shows up Wednesday and Thursday, leading into the traditional charity preview and black-tie gala on Friday. The regular people storm through the doors beginning Saturday morning.
After all, it's not all about media. There's a reason this event, one of just a handful of truly prestigious auto shows globally, is run by the Detroit Area Dealers Association: Car shows, in the end, are meant to sell cars.
--by John Voelcker
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