Automakers' hopes, anxieties on display in Detroit

Business Materials 12 January 2008 08:07 (UTC +04:00)
Automakers' hopes, anxieties on display in   Detroit

( dpa )- Automakers are headed to this year's Detroit auto show with a mixture of hope and anxiety.

The birthplace of automotive mass production hosts the annual North American International Auto Show in January, with press reviews starting Sunday and the public opening on January 19.

Wherever one looks in the transport industry, the trends are uncertain.

Demand is soaring in emerging economies like China, but the mood for consumption has sobered in industrialized societies under a hailstorm of worries about climate change, exploding petrol prices and the US mortgage crisis, which could rein in consumer credit for other big-ticket purchases including cars.

"At the moment, anxiety has the upper hand," said analyst Tim Schuldt of the investment group Equinet .

In Western Europe and above all in Germany, uncertainty about the future form of taxes on carbon-dioxide missions plagues automakers, said auto analyst Marc- Renne Tonn of MM Warburg. In addition, there are increasingly harsh traffic restrictions in European cities.

While Europe can expect relatively stable sales figures for 2008, that's not the case for North America.

"It really looks difficult in the US market," Tonn said.

B& D Forecast, a firm that studies automotive demand, reckons that US sales will drop to 15.9 million vehicles in 2008 - the lowest level in years. In 2007, 16.15 million vehicles were sold in the US.

The US big three carmakers - General Motors (GM), Ford and Chrysler - are in the midst of painful restructuring as they close factories, trim production goals and eliminate jobs.

They missed the fuel-economy trend and have been bypassed by European and Japanese rivals in the fastest-growing market segments. US market leader GM had a 6-per-cent drop in sales for 2007, Ford reported minus 12 per cent, and Chrysler sold 3.1 per cent fewer vehicles.

Nonetheless, domestic manufacturers still claim 50 per cent of the US market. German producers, with the exception of Volkswagen, all showed sales increases, and Toyota boosted its sales by 3 per cent.

The theme of carbon emissions took a front seat in autumn at the International Automobil-Ausstellung (IAA - International Automobile Show) in Frankfurt.

"New technologies to reduce emissions and fuel use will also set the tone in Detroit," Tonn said.

This months show would not be Detroit without the usual parade of monsterous sport-utility vehicles and pickup trucks. This year, they are at least a bit smaller and a little greener.

Toyota is introducing its A-Bat, a truck-car hybrid that is a compact version of a pickup truck. Mercedes is showing its small all- terrain vehicle, the GLK.

Chrysler's Jeep unit is presenting its Renegade, another small SUV that seats only two and is powered by an electric and small diesel motor.

Regardless of the glitzy US show, the rest of the world will call the tune for the automotive industry in coming years, says Ferdinand Dudenhoeffer of B& D. With increasing contraction of sales in traditional markets, hopes rest on emerging economies led by China and India.

Combined sales in the US, Europe and Japan are expected to drop from 37.1 million to 36.9 million vehicles, B& D says. In booming regions like China, Russia, Brazil and India, demand is projected to grow from 20.8 million to 22.7 million vehicles.

Worldwide, auto sales are expected to climb from about 58 million to 59.6 million vehicles.

Firms that are mass-producing cheap cars are in the best position to grow. B& D says that the fastest growth will be among cars costing less than 7,000 dollars, a market expected to grow to 10 million vehicles by 2015. French automaker Renault plans to bring a 3,000- dollar model to emerging economies within two years or less.

The Indian automaker Tata is already doing it this year, with the 2,500-dollar Nano .