A battered Detroit puts on bright smile for auto show

(NAIAS)

A badly battered Detroit was doing its best to put on a bright smile for the nation's premier auto show which opens Monday in the wake of one of the worst years in Motown's history.

Hometown giants General Motors and Chrysler were forced to seek billions in government loans and finally bankruptcy protection in the wake of a collapse in auto sales amid a broad economic crisis.

And while Ford managed to both stay afloat and increase its share of the shrunken market, the Detroit Three were dethroned by Asian automakers in 2009 as the biggest sellers in the US market.

"It was a year that nobody wants to repeat," said Rebecca Lindland, an analyst at IHS Global Insight.

"The one silver lining is that only two of our major car companies had to declare bankruptcy because, seriously, just looking at how the sales fell, it's a miracle that more didn't have to."

Auto sales were down dramatically worldwide and in the United States they fell 21.2 percent to 10.43 million vehicles in 2009, according to Autodata figures released last week.

That is the lowest level since the 1983 recession and drastically below the 15 to 17 million vehicle range posted in each of the previous 15 years.

The collapse came as Detroit was smarting from years of mass layoffs and plant closures as GM, Ford and Chrysler restructured their operations in the wake of a decades-long loss of market share to Asian rivals that accelerated dramatically when high gasoline prices undermined truck and sport utility vehicle sales.

The Detroit Three - which held a 60-percent share of the US market as recently as 2004 and a 70 percent stake a decade ago - ended 2009 with a 44.2 percent stake.

Asian automakers captured a 47.4-percent share in 2009, up from 44.6 percent in 2008, Autodata said.

Part of the loss comes from the fact that the Detroit Three are offering customers fewer options and focusing on "core" products.

GM is in the midst of shedding half its brands, Ford will have done the same after it completes the sale of Volvo, and Chrysler has dramatically cut back its offerings under the management of Italy's Fiat.

All three automakers insist that the painful cuts have positioned them for long-term profitability and a congressional delegation will be visiting the show to see how those plans have translated into products.

"For the domestic brands, the objective is to really showcase that they are here to stay," said Jeff Schuster, director of forecasting at JD Power.

There is no doubt that 2010 will be a challenging year.

While most forecasters are forecasting a moderate rise in US auto sales, they are expected to remain at significantly depressed levels and could be badly hit should the economy take another bad turn.

"For 2010, I'm leaving my seatbelt on, because I think that volatility is still an element of the new norm," Ken Czubay, Ford vice president for US marketing sales and service said in a conference call discussing Ford's December sales results last week.

Yet the fact that the Detroit Three managed to survive the recent turmoil to mount displays highlighting their new focus on stylish and fuel-efficient vehicles has granted new hope to the Motor City.

"The mood is incredibly, diametrically, 180 degrees different than what it was a year ago," said Doug Fox, chair of the North American International Auto Show.

"There's some stability in the market. That has really heartened a lot of people that maybe we have hit the bottom."

mso/mk