But not everyone is convinced that hybrids, let alone electric cars, will be a big winner for the industry, at least in the near term. They currently account for a meagre three per cent of U.S. auto sales, a reality made clear looking out the Cobo Center’s floor-to-ceiling windows at the exhaust-spewing cars plying Detroit’s snow-covered downtown. For a company like GM, which is currently owned by the government, it’s as much about politics as market demand, analysts say. “They’re trying to tell Washington that they’re addressing the issue and to stay away from regulating us,” says automotive analyst Dennis DesRosiers.
Indeed, a recent report by the Boston Consulting Group concluded that, barring major advances in battery technology, carmakers will not be able to reach the cost targets necessary to make electric and hybrid vehicles a truly mass-market product. Hybrids on the road today carry a hefty price tag. Toyota’s Camry Hybrid, for instance, sells for $30,900 compared to $24,900 for the regular gasoline version. Even GM’s Lutz, who was closely involved with the development of the Chevrolet Volt plug-in car, says it will be at least a decade before hybrids and other battery-powered cars make up just 10 per cent of sales. “Unless the price of gasoline goes up a lot, it’s going to be very difficult to make a lot of money off strongly hybridized cars, plug-in hybrids or vehicles like the Volt because they contain a lot of cost and technology and sell at a relatively high price.”
In the meantime, carmakers will have to rely on smaller combustion engines and smaller cars to achieve stricter fuel efficiency standards, although many Americans have so far shown little interest in tiny vehicles that lack horsepower. Still, that didn’t stop automakers from forging ahead with all sorts of new models and concepts in Detroit. In addition to its new Focus, Ford also showed off its subcompact Fiesta, while GM had the Chevrolet Cruze, Aveo RS concept and ultra-small, pug-faced Spark. Mazda, meanwhile, displayed its “supermini” Mazda2 car and Honda showed off its two-seat CR-Z hybrid. German carmaker Volkswagen also pulled the curtain back on a yet-to-be-named hybrid coupe concept.
There was also small-car talk from Chrysler (although it did not have any unveilings scheduled at this year’s show). Reid Bigland, the president of Chrysler Canada, said the company would begin selling the tiny Fiat 500 in Canada and the U.S. this year, adding that the marriage of the two automakers was ideal since it mated Fiat’s expertise in small vehicles with Chrysler’s strengths in trucks, minivans and SUVs. Still, it made for a haphazard floor display as sleek and sexy offerings from Fiat’s Ferrari and Maserati brands—complete with scantily clad women draped on their hoods—were dropped into a sea of muscle cars and Jeeps. The idea, says Bigland, was to let people’s imagination fill in the blanks in terms of what sorts of products the Fiat-Chrysler union might eventually yield. “What they are going to put together is that the same company that makes the Maserati also makes the minivan.”
Most industry watchers believe the worst is finally over for the auto industry—U.S. sales are forecasted to climb 11 per cent this year, while Canadian sales are expected to be up four per cent—but others are quick to point out that some automakers, particularly the Detroit Three, still have a lot of road to travel. “They have fundamental issues that they still need to deal with,” says DesRosiers, citing dealership networks that are in disarray following last year’s restructuring, orphaned brands and, most importantly, the ongoing challenge of designing and building vehicles that people want to buy.
After spending years focused on trucks and SUVs, Detroit has so far failed to make much of a dent in the Asian automakers’ stranglehold on the small car segment. While Chrysler won praise five years ago by borrowing styling cues from its past for vehicles like the gangster-looking 300—a favourite of rapper Snoop Dogg—the design renaissance was short-lived and the car never enjoyed anything close to mass appeal. Fast-forward to the end of the decade and only Ford can claim to have a car, the Fusion, on the list of best-selling vehicles in the U.S. last year. “It sounds so simple when you say it, but it’s really just about having the products that people want to buy,” says Jeff Schuster, the executive director of forecasting at JD Power and Associates. “But it’s just very, very difficult to execute on that simple statement.”
It’s equally difficult to predict which new models will catch on once they are removed from their gleaming auto show pedestals and parked in dealerships across the country. The good news for Ford, GM and potentially Chrysler is that, judging from this year’s show, their small-car offerings are starting to closely resemble those made by their Asian and European rivals. They may not scream “Made in America” anymore, but as Detroit has learned the hard way, that’s no longer the selling point it used to be.
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