Can Detroit Be Relevant?

Can Detroit Be Relevant?
http://wheels.blogs.nytimes.com/2008/01/11/can-detroit-be-relevant/?hp

This week, Rick Wagoner, chief executive of General Motors, was at the
Consumer Electronics Show in Las Vegas talking about driverless cars and
the Cadillac Provoq, a concept vehicle powered by a fuel cell.

But bigger news came half a world away, at the New Delhi Auto Expo in
India. Tata Motors was unveiling the Nano. Nicknamed the People’s Car,
the Nano is a small $2,500 car that is expected to revolutionize the
auto industry, in India, at least. Tata expects to sell 250,000 a year
in its home country before export to other emerging markets begin.

Such is the new automotive landscape. Last year, the press made a big
deal about Chinese automakers displaying at the Detroit auto show.
Twelve months later, the Chinese will be back, but it is now business as
usual. The Nano and the overwhelming hype surrounding it underlined a
huge shift in the global auto industry. Whether or not the Nano is
feasible as a global product isn’t the issue. It just seems more… relevant.

It is ironic that the two events – G.M.’s keynote in Vegas, which Mr.
Wagoner boasted was the first of its kind, and Tata’s in New Delhi –
occurred on top of each other. And it is even more ironic that Tata
usurped the hype with a small lo-fi car.

General Motors has long been criticized for its reluctance to build
vehicles that are relevant in the world of rising oil prices and overall
environmental awareness. G.M. has answered with a string of futuristic
fantasies like the Provoq, but as the Nano has shown, the public simply
wants small cars.

Some of the most popular cars in the marketplace are the Honda Fit, the
Mini, and the Scion xB. This year, Smart starts selling the Fortwo in
America. Even BMW is going small with the 1 Series.

But none of the American automakers seem committed to developing a
proper small car for the United States, which is to say that they are
ceding this entire segment of cars to foreign companies. The Chevrolet
Aveo is a rebadged DaihatsuDaewoo. The Cobalt is a size bigger than the
Smarts and Scions of the world. The Ford Focus that is sold in America
hasn’t changed in more than eight years, while those sold in Europe were
completely redesigned in 2005. And when Chrysler ended production of the
Neon, it didn’t replace it with anything; the smallest Dodge, the
Caliber, is a size up from the Neon. Detroit’s lack of a truly
competitive minicar is the elephant in the showroom. And the more
Detroit boasts about fuel cell and hybrid S.U.V.’s, the bigger the
elephant grows.

None of this is new news. It is just the current state of the automotive
world as we approach the North American International Auto Show in
Detroit, which opens to the press on Sunday. Although the Detroit auto
show is the first in the calendar year, this year it actually arrives on
the heels of several major shows going back to last September and the
Frankfurt Motor Show, which was followed by Tokyo, Shanghai and now New
Delhi. In other words, it has a few tough acts to follow.

So what can we expect?

Light trucks and S.U.V.’s will be plentiful. Ford, which will hold the
first press conference on Sunday, has already gone public with
information on the new Explorer America, which will feature EcoBoost,
Ford’s new turbo direct-injection engine. It is expected to increase
fuel economy by 20 percent to 30 percent, depending on the size of the
power plant. The Explorer America offers a choice between a 2-liter
four-cylinder or a 3.5-liter V-6.

According to The Detroit News:

Over the next five years, Ford plans to make EcoBoost engines
available on most of its products worldwide, starting with the Lincoln
MKS sedan in 2009. The promise is a big one: up to 20 percent better
fuel economy and 15 percent less carbon dioxide emissions than a
standard engine offering the same horsepower. And unlike hybrids,
EcoBoost promises to deliver these savings in both city and highway driving.

And, while Ford is not giving any specifics on the cost, the
company says it will be nominal. Ford says that at current gas prices,
EcoBoost will pay for itself in about 2.5 years, compared with more than
seven for diesel and more than 11 for a hybrid.

Diesels will also have a strong showing in Detroit. Audi will introduce
a diesel version of its R8 supercar, powered by a V-12 TDI turbo diesel.
BMW will have an array of diesel vehicles, which it promises to have on
sale in American by the end of the year.

There will also be performance cars, like the 620-horsepower Corvette
ZR1 and the 500-horse Cadillac CTS-V, but the key to Detroit — and what
we will be keeping our eyes on — will be how Detroit automakers intend
to stay relevant in the widening world. So far, there’s no advance word
on an American small car concept, though all three Detroit manufacturers
seem to have something in the works. Ford introduced a small car concept
in Frankfurt called the Verve and will have a sedan version of it in
Detroit. General Motors recently announced that it was moving forward on
the Beat concept car. And on Friday, Chrysler announced that Nissan
would supply it with a small car to sell in South America.

But could they be too little too late?

--
Civis Romanus Sum

Jim Higgins wrote:
> Can Detroit Be Relevant?
> http://wheels.blogs.nytimes.com/2008/01/11/can-detroit-be-relevant/?hp
>
> This week, Rick Wagoner, chief executive of General Motors, was at the
> Consumer Electronics Show in Las Vegas talking about driverless cars and
> the Cadillac Provoq, a concept vehicle powered by a fuel cell.
>
> But bigger news came half a world away, at the New Delhi Auto Expo in
> India. Tata Motors was unveiling the Nano. Nicknamed the People’s Car,
> the Nano is a small $2,500 car that is expected to revolutionize the
> auto industry, in India, at least. Tata expects to sell 250,000 a year
> in its home country before export to other emerging markets begin.
>
> Such is the new automotive landscape. Last year, the press made a big
> deal about Chinese automakers displaying at the Detroit auto show.
> Twelve months later, the Chinese will be back, but it is now business as
> usual. The Nano and the overwhelming hype surrounding it underlined a
> huge shift in the global auto industry. Whether or not the Nano is
> feasible as a global product isn’t the issue. It just seems more… relevant.
>
> It is ironic that the two events – G.M.’s keynote in Vegas, which Mr.
> Wagoner boasted was the first of its kind, and Tata’s in New Delhi –
> occurred on top of each other. And it is even more ironic that Tata
> usurped the hype with a small lo-fi car.
>
> General Motors has long been criticized for its reluctance to build
> vehicles that are relevant in the world of rising oil prices and overall
> environmental awareness. G.M. has answered with a string of futuristic
> fantasies like the Provoq, but as the Nano has shown, the public simply
> wants small cars.
>
> Some of the most popular cars in the marketplace are the Honda Fit, the
> Mini, and the Scion xB. This year, Smart starts selling the Fortwo in
> America. Even BMW is going small with the 1 Series.
>
> But none of the American automakers seem committed to developing a
> proper small car for the United States, which is to say that they are
> ceding this entire segment of cars to foreign companies. The Chevrolet
> Aveo is a rebadged DaihatsuDaewoo. The Cobalt is a size bigger than the
> Smarts and Scions of the world. The Ford Focus that is sold in America
> hasn’t changed in more than eight years, while those sold in Europe were
> completely redesigned in 2005. And when Chrysler ended production of the
> Neon, it didn’t replace it with anything; the smallest Dodge, the
> Caliber, is a size up from the Neon. Detroit’s lack of a truly
> competitive minicar is the elephant in the showroom. And the more
> Detroit boasts about fuel cell and hybrid S.U.V.’s, the bigger the
> elephant grows.
>
> None of this is new news. It is just the current state of the automotive
> world as we approach the North American International Auto Show in
> Detroit, which opens to the press on Sunday. Although the Detroit auto
> show is the first in the calendar year, this year it actually arrives on
> the heels of several major shows going back to last September and the
> Frankfurt Motor Show, which was followed by Tokyo, Shanghai and now New
> Delhi. In other words, it has a few tough acts to follow.
>
> So what can we expect?
>
> Light trucks and S.U.V.’s will be plentiful. Ford, which will hold the
> first press conference on Sunday, has already gone public with
> information on the new Explorer America, which will feature EcoBoost,
> Ford’s new turbo direct-injection engine. It is expected to increase
> fuel economy by 20 percent to 30 percent, depending on the size of the
> power plant. The Explorer America offers a choice between a 2-liter
> four-cylinder or a 3.5-liter V-6.
>
> According to The Detroit News:
>
> Over the next five years, Ford plans to make EcoBoost engines
> available on most of its products worldwide, starting with the Lincoln
> MKS sedan in 2009. The promise is a big one: up to 20 percent better
> fuel economy and 15 percent less carbon dioxide emissions than a
> standard engine offering the same horsepower. And unlike hybrids,
> EcoBoost promises to deliver these savings in both city and highway
> driving.
>
> And, while Ford is not giving any specifics on the cost, the company
> says it will be nominal. Ford says that at current gas prices, EcoBoost
> will pay for itself in about 2.5 years, compared with more than seven
> for diesel and more than 11 for a hybrid.
>
> Diesels will also have a strong showing in Detroit. Audi will introduce
> a diesel version of its R8 supercar, powered by a V-12 TDI turbo diesel.
> BMW will have an array of diesel vehicles, which it promises to have on
> sale in American by the end of the year.
>
> There will also be performance cars, like the 620-horsepower Corvette
> ZR1 and the 500-horse Cadillac CTS-V, but the key to Detroit — and what
> we will be keeping our eyes on — will be how Detroit automakers intend
> to stay relevant in the widening world. So far, there’s no advance word
> on an American small car concept, though all three Detroit manufacturers
> seem to have something in the works. Ford introduced a small car concept
> in Frankfurt called the Verve and will have a sedan version of it in
> Detroit. General Motors recently announced that it was moving forward on
> the Beat concept car. And on Friday, Chrysler announced that Nissan
> would supply it with a small car to sell in South America.
>
> But could they be too little too late?
>


Good overview of relevance.

The market will drive this. When the final
crunch arrives, the most agile companies will
survive.

The Beetle succeeded and the Prius succeeds, not
because of 'relevance' but because of perceived
self-image. Remember that the Beetle was
replaced by the Range Rover as the 'image car.'

Today, it's the prestige of traveling in the HOV
lane without a passenger.

Over seventy years ago, Will Rogers quipped,
"... this country is going to the poorhouse;
but, it is the first country that will go to the
poorhouse in an automobile."

At that time, people looked at the "relevant"
offerings (Willys, Crosley and the smallest
Nashs and Studebakers). They voted with their
pocketbooks in favor of larger cars from GM,
Hudson, Packard, Chrysler and Ford.

My Dad grossed $185 a month in 1937. He needed
a replacement car and stretched his budget to
buy the largest new sedan he could afford.
Later, he mentioned that he made the choice
because he "...feared that the future would be
devoid of large cars."

The next five years hold a lot of uncertainty.
My close friends and children are *buying*:

1. Bulky beasts with high aero drag and
enormous rolling friction.
2. High curb weight.
3. Sophisticated engine features, not in the
name of efficiency but because they are
impressive on a spec-sheet.

There is no longer a Prius waiting list where I
live and lease terminations are plentiful.

Most of my friends and children verbally talk a
good game of "green." They respond to surveys
in favor of green. They fail to walk their talk.

Times ahead look uncertain to many Americans.
That uncertainty leaves no garage space for a
'relevant' car. Detroit knows this.

Well on my way to octogenarian status, I feel
secure in my belief that our citizens will not
embrace a 'relevant' piece of iron until they
are forced to walk to the bus and walk to the
store. They will not walk to the poorhouse --
or ride there in a 'relevant' automobile.

Oh yeah, I'm one of those 'greenies,' complete
with MBA.

--
pj