Car dealers rejoice as optimism returns to Motown

As the North American International Auto Show unveils a slew of new models and ideas, Sarah Arnott reports from Detroit

Detroit is back; the glitz and the glamour are back; the car industry is back. Such, at least, was the mood yesterday at the launch of this year's North American International Auto Show (Naias) – the biggest US car show and a bellwether of the health of the world's motor manufacturers.

After a depressing couple of years, as the cold wind of recession whipped through consumer confidence and sent car sales plummeting the world over, the 2010 Detroit motor show is a return to form. The display stands are vast, packed with heavily made-up women with improbable hair and uncomfortable shoes. And the wall-to-wall product launches are a disorientating carnival of bright lights, booming bass-lines and clouds of dry ice.

There are the serious exhibits: such as the all-new 2012 Volkswagen Passat. There are the futuristic, such as Porsche's 918 RSR hybrid racer, with an electric motor on each front wheel. And there are the downright wacky, such as Toyota's "swagger wagon" – a ludicrously stretched Sienna with an interior that is part-minivan, part-private jet, complete with swivel seats and TV screens. But the optimism is available in any colour, as long as it's green.

Electrified cars – be they battery-powered, battery-assisted or any number of varieties in between – are the biggest battleground for the future of the motor industry. With a slew of recent figures – including US sales up by 11 per cent in 2010 – putting the recession safely behind it, the global car market is rapidly expanding. By 2014, total sales are expected to reach more than 90 million from fewer than 60 million in 2003. And with some estimating that electric vehicles will make up 10 per cent of the market by 2020, the prize is a significant one.

With a new minivan version of the world-leading Toyota Prius hybrid expected late last night, the biggest launch on the opening morning of the show was from Ford. Underscoring the car industry's return to growth, the company announced plans to recruit 7,000 new US workers over the next two years. And, deluging the crowds with thousands of paper butterflies, Ford introduced three new electrified vehicles as part of its strategy to give customers a choice of greener cars. The all-new electric Focus, which charges in less than four hours, will go on sale in the US later this year and in Europe in 2012. The C-Max Energi – a plug-in hybrid with a 500-mile range – also goes into production next year. And the C-Max Hybrid, which can run on either engine or battery power, will be more fuel efficient than the market-leading Ford Fusion, the company said.

Bill Ford, Ford's executive chairman, described the range as a milestone in the company's. "We are producing a range of electric vehicles because our customers have a range of needs," he said.

While car-makers vie for pole position in electric vehicles, analysts remain sceptical about their practicalities. There is the "range anxiety" of limited-life lithium ion batteries and the need to recharge. Then there is the cost. When the Nissan Leaf – the first all-electric family-size car – goes on sale in the UK this year it will have a price tag of about £23,000, even with the help of a £5,000 government subsidy. And there are even questions about whether the current lithium ion battery technology will survive at all.

"The technical flux is something the industry hasn't experienced for 50 or 60 years," said Dan Akerson, chief executive of General Motors, which won the coveted North American Car of the Year award at Naias yesterday, for its electric Chevrolet Volt (which will be sold in Britain from spring 2012 as as the Vauxhall Ampera). With so many different technologies still in development, companies must make investments slowly, taking care not to put all their eggs in one basket, Mr Akerson said.

The Volt was launched in the US last month and has had more than 200,000 expressions of interest so far, according to GM. It is planning to produce more than 25,000 Volts this year, and hopes the figure will rise further. "We have to get to 150,000 to 200,000 Volts per year as soon as possible," Mr Akerson said, predicting that it would take two or three years.

But he acknowledged that it will take longer still for production levels to get close to those of conventional cars. "We're not going to hit two million in the next three years," said Mr Akerson. "It will be closer to five."

In the meantime, everyone from Lexus to Honda to the all-American Buick is focusing on fuel efficiency, whether electric or not. And with customers showing signs of reaching for their wallets once again, the sighs of relief in Detroit were almost audible. "The last big show was in 2008, then things shut down," said one Naias veteran yesterday. "But now things are on the way back up again, people just aren't having to pinch pennies anymore."