Sunday, February 26, 2012

Car-makers put on their brakes.

There were no flying cars or other awesome technologies at this year's Detroit auto show, as manufacturers facing a steep drop off in sales focused on fuel efficiency and fewer frills. Bankruptcy is still a very real possibility for car firms, so real that Asian automakers say they are re-evaluating their US supply chains. "The supply base is a big concern," John Mendel, vice president of automotive operations for American Honda said. "Even in good years we'll have a dozen sales, consolidations, bankruptcies." And this year is expected to be an incredibly bad year, with US auto sales forecast to fall by up to three million vehicles to between 10.5 and 12 million units. That follows an 18 per cent drop in sales last year in the sharpest decline in 29 years. Sales have hovered at between 16 and 17 million vehicles for the past decade and have not been below 12 million since the recession of 1982, when the US had 74 million fewer people than today. So most auto-makers were focused on showing their new line ups of long-awaited electric and hybrid cars, expected to hit showrooms as early as mid-2009 through to 2012. And some rehashed technologies - such as cars that park themselves or keep drivers from straying into oncoming lanes, and rain-sensing windshield wipers. Chrysler and General Motors (GM) were especially restrained because they wanted to show US taxpayers what they will get for their $13.4 billion bail-out of the two Detroit-based auto makers, not fanciful technologies, said analysts. Others are concerned about a global recession, and aimed to push pragmatism over splendour. "The themes of this year's show were restraint and fuel efficiency, and more low-key," said Tom Libby, an industry analyst with JD Powers and Associates. "There was a lot of emphasis on hybrids because that's the next shift in their product lines - making more fuel efficient vehicles." If the 2009 North American International Auto Show seemed a bit "sombre", he said, it's because car-makers "couldn't be seen spending lavishly" while clamouring for government aid to avoid ruin. "They're trying to get that message across because that's what the US government wants them to make," he said, in the case of Chrysler and GM. "I don't think they're ignoring other technologies, but they're under extreme pressure to satisfy Congress right now." GM showed off the production version of its electric Chevrolet Volt, Chrysler its concept 200C sedan, and Daimler rolled out its concept car BlueZero, slicing and dicing it to show journalists the inner workings of battery-powered cars. Toyota meanwhile launched its third generation Prius, which boasts 50 miles per gallon and Ford announced plans for several electric and hybrid vehicles to be launched over the next four years. However, unrestrained luxury cars are still selling well, despite the doldrums in the global auto industry. If you happen to have a million dollars to spend on a car, for example, Mercedes could make you one of the "happy few" to be offered a chance to buy one of only 75 new SLR "Stirling Moss". The new SLR, which goes on sale starting in June, will be reserved for owners of previous SLR models - which sold for as much as $300,000 - and them alone, said a Mercedes spokesman at the Detroit auto show. The nouveaux riches, recent lottery winners and the like, can thus only dream of getting in the driver's seat. In a market in dramatic decline, high-end brands such as Bentley, Maserati, Lamborghini, Jaguar, Maybach and Rolls Royce are still posting strong sales, up eight to 50 per cent, notably in emerging markets such as Eastern Europe.

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