The Cars Detroit's Future Is Riding On
Cue the annoying club music. Buff the fenders on the concept cars. Gloss the tires with Armor All. And wrap up the final edits of the platitude-packed speeches that the executives will deliver. It's time for the annual Detroit auto show.
Usually, the cars taking center stage at the North American International Auto Show are exotic novelties, like a new Rolls or Bentley. Maybe a Corvette or a new Mustang. Last year, reborn muscle cars like the Dodge Challenger and Chevrolet Camaro were the talk of the show. This year, look for a sexy FT-HS sports car concept from Toyota (TM) to provide a little sex appeal.
But forget about that minor stuff. The question on everyone's mind is, given the state of Motown's automakers, do General Motors (GM), Ford Motor (F), and DaimlerChrysler's (DCX) Chrysler Group have cars in the wings that will tow them out of danger?
They do have a few high-volume sellers that will create some buzz. Some will hit, others won't. And even nicely done domestic cars come with the caveat that their sullied brands may not give them a chance with some consumers. But to keep 2007 from being as bloody as 2006, the U.S. auto industry has to start somewhere. These cars may not be the ones that will return Detroit to health, but they may at least help stem the hemorrhaging.
Chevrolet has the all-new 2008 Malibu making its debut. And it's a looker. Clay Dean, the car's chief designer, says GM moved the cabin and rear window back toward the trunk to give the front-wheel-drive family car the illusion that it has the longer, more prominent hood and sporty stance of more expensive cars. Says Dean, "The car looks cocked and ready to go."
GM will finally get its bread-and-butter sedan in line with Japanese competitors when it comes to engine technology. The 3.6-liter V6 engine has variable valve timing for better fuel economy, and six-speed transmissions are standard. Throw in standard side-curtain air bags and the car will be nicely equipped. Pricing isn't out yet.
Look for the Camaro convertible, too. Sure, it's a piece of eye candy. But GM will aim the car at middle-class folk and hopes to sell 100,000 a year. Look for GM to build the convertible shortly after the Camaro coupe hits the street around 2009. Along with the Malibu, it's clear that Chevy is finally trying to take its passenger car business seriously. "This does what the 1955-through-1957 Chevys did," says AutoPacific Vice-President James Hall. "It looks more expensive than it really is."
Chrysler has tried to do the same. But few people are that excited over the new Sebring sedan. But look for the new Town & Country minivan at the auto show. It's vital for Chrysler's success, especially given the fact that Toyota's Sienna and Honda's (HMC) Odyssey minivans have been taking a bite out of Chrysler on the high end of the market, and Hyundai and Kia are nibbling at the low end.
What's the selling point of the new Chrysler Town & Country and Dodge Caravan? The biggest new hook is "Swivel 'n Go." The second row of seats turn to face the third-row seats and a table pops up in the middle. Kids can do their homework, play Go Fish, or just chat. It's a living room on wheels.
Chrysler did a couple of years' worth of research to see how customers live with their minivans. They came away knowing that young families spend so much time in these vans that they needed a way to interact more easily. Plus, the van still can be converted into a cargo van by folding all of the seats into the floor. When they're up, the space beneath has tons of concealed cargo space. Chrysler also upgraded the van's interior, which is currently cheap and so 1990s. You can also roll down the second-row windows, a first for minivans.
Parents will also like the easy-to-clean and odor-resistant fabrics that line most of the interior. The new ones go on sale this fall.
On the upside, the Town & Country may get an additional lift from the fact that both GM and Ford are exiting the minivan business—or at least the traditional minivan business. But both will chase some of those buyers with crossover SUVs. On the downside, says AutoPacific's Hall, demographic trends show a slowdown in minivan sales. Chrysler has 38% of the minivan market, but it fell 12% in 2006.
There just aren't as many Gen Xers with kids as there were boomers with babies when minivans were the rage in the '80s. Plus, "they're a generation that grew up in minivans," Hall says. "They won't drive their parents' cars."
Ford has been criticized for some time for not investing in its Focus subcompact. Launched in 1999, the car has only been given cosmetic upgrades and, in 2004, a new more fuel-efficient engine. But later this year, Ford will launch a redesigned Focus to take advantage of consumers' increasing appetite for greater fuel economy.
Despite its age, the current Focus is no slouch, even compared with newer entries like the Toyota Yaris (see BusinessWeek.com, 6/14/06, "The Judgment of Yaris"), Honda Fit (see BusinessWeek.com, 8/21/06, "Nice Fit"), and Nissan Versa (see BusinessWeek.com, 9/25/06, "Nissan's Nice Versa"). The car, which was plagued by early recalls, has been straightened out over the years. It sold 177,000 in 2006, and has always been hailed in the auto press for nimble handling. But sales were down 4.2% last year, despite the surge in small-car sales, because of its dated styling.
The new Focus looks more like a sibling of the Ford Fusion, with higher window sills that give the car a bit of the turret-top look made popular by the Chrysler 300 a few years ago. The cabin is decidedly more "grown-up" than the old model, with a traditional horizontal dashboard setup that is as neat and tailored as Ford's other new instrument panels in the Fusion, Five Hundred, and Edge (see BusinessWeek.com, 10/18/06, "First Drive: Ford's Edge"). If the current Focus feels a bit like a college student's car, the new one, which goes on sale this fall, is more of a young professional's—but at college budget prices. The carryover 2.0-liter, Duratec 4-cylinder (partial zero emissions) engine is too good to mind that it's going inside a newly styled package.
"Solid" was the idea that guided stylists, says Ford chief designer Peter Horbury. "When you go down the road, we wanted people to have a more solid and substantial feeling than they have with the current Focus without adding weight and jeopardizing fuel economy."
Ford used the same platform for the new Focus, but engineers retuned the suspension. Given the fact that the current car needs $3,000 in rebates to sell, anything would be an improvement. The company is hoping a new design and its highway fuel economy rating of 37 mpg can push sales closer to 200,000 in 2008 with a lot less bribe money to customers. That would be some trick; so would making this money loser profitable.
Given the billions in losses the Detroit carmakers are racking up, it's plain to anyone why these new models are so vital. But there's one more reason. China's Changfeng Motors will show its Liebao SUV at the show. And the company intends to sell it here. That's all Detroit needs: one more low-cost competitor. Better get more of these new models out, and fast.
Click here to see the newest offerings from U.S. and international automakers at this year's North American International Auto Show.