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January 14, 2009

Automakers put on a brave face Monday as they introduced new models at the Detroit auto show amid a collapse of industry sales that could lead to the disappearance of iconic brands.

A financial crisis, credit crunch and deepening recession pushed 2008 US sales down 18 percent in the steepest decline in 29 years and to the lowest level since 1992.

This year is expected to be even worse and the trouble has spread to Europe, Asia and the rest of the Americas.

"We're seeing the impact and ferocity of deep recessionary trends in the US," General Motors chief operating officer Fritz Henderson told reporters Monday.

"It's really rippling throughout all of the globe. In the month of December there were only two markets that were up versus December of '07: Poland and China."

Global auto sales are forecast to fall by more than four million vehicles in 2009 to 66.8 million units with the bulk of the losses occuring in the United States, according to IHS Global Insight.
Both GM and Ford were fielding questions about the futures of their Swedish marks Saab and Volvo, which are currently under review for a potential sale and are awaiting a bailout package of loans from the European investment bank.

But more pressing was the future of the Detroit Three themselves.

Privately held Chrysler, which saw US sales drop 30 percent last year, was considered to be most at risk.

hrysler's chief executive officer insisted that the company was on track for long-term viability and would be able to repay a four-billion-dollar emergency loan it obtained earlier this month from the US government.

But getting through the next year will be "very challenging," Bob Nardelli said, given that Chrysler expects US auto sales to fall to between 10.5 and 11.1 million vehicles from 13.5 million in 2008 and an average of 16.5 million in recent years.

Both GM and Chrysler must present viability plans to the US Treasury on February 17 and both hope to obtain a second batch of government-backed loans.

GM's Henderson said the plan will contain "no surprises" but there will be "even more aggressive" cost cuts to come.

Ford, which had initially asked for a government loan but then said it had sufficient resources to get through the downturn, said Sunday it was "in good shape in the financing of our plan."
But on Monday, chief executive Allan Mullaly told Bloomberg TV that it may need to access government loans if US auto sales worsen.

The Detroit Three focused most of their product launches at the Detroit auto show on hybrids and small cars set to soon hit the US market and prototypes of electric cars they hope to introduce in the coming years.

Ford entered the electric fray with a promise to bring a collection of electric vehicles to market by 2012 and introduced two new, production-ready hybrids.

On Monday, it unveiled updated crossover sport utility vehicle and sedans for its Lincoln and Mercury brands outfitted with EcoBoost engines to increase fuel economy.

GM promised to bring a mini car, the Spark, to the US market by 2011, and unveiled a prototype of a Cadillac extended range, plug-in hybrid.

Chrysler unveiled three plug-in, gas-electric, hybrid prototypes -- a sedan, a Jeep and a sports car -- which it said "clearly demonstrates that we are well on our way to bringing electric vehicles to our consumers' garages."

Refusing to be upstaged, Toyota unveiled a revamped version of its popular Prius that can now get 50 miles to the gallon (21 kilometers per liter).

The car is "superior to anything we have ever built," said Toyota vice-president of sales Bob Carter, and production is to be ramped up to 400,000 cars annually as sales are expanded to a total of 80 countries.

Toyota also announced plans to launch a two-seater electric car by 2012, and introduced a new dedicated hybrid for its luxury Lexus brand on Sunday.

China's BYD Auto, which was the first automaker to bring a plug-in hybrid to market last month, announced plans to bring its extended electric and plug-in hybrids to the United States in 2011.
It would likely be the first Chinese automaker to enter the highly-competitive US market and beat many established automakers in offering an extended-range electric vehicle to US consumers.
The North American International Auto show opens to the public January 17 and some 700,000 people are expected to attend by the time it closes on January 25.