Ford and Volkswagen are preparing to announce a strategic partnership, including in areas such as self-driving and electric autos, at the Detroit auto show (Patrik STOLLARZ)
New York (AFP) – Trying to reclaim its past glory as the world’s preeminent event, the Detroit auto show kicks off Monday with shiny, new cars displayed against a gloomy outlook for the industry.
American, Asian and European auto makers will try to ramp up the excitement, showcasing their latest offerings at the event starting next week at the massive Cobo convention center in downtown Detroit.
But several major brands were skipping the show altogether, while others were reducing their presence — something unheard of in years past when the event was impossible to miss.
And analysts said they expect few headline-grabbing announcements.
The dwindling interest was expected to bring a subdued air to the annual gathering organized by North America’s car dealers, which are fresh off a year of sales growth but facing what analysts expect will be a gloomy 2019.
“The Detroit show historically included great anticipation around new products, designs, features and power trains. This year? Not so much,” industry analyst Adam Jonas of Morgan Stanley said in an investor note.
Not only are American car makers reducing their footprint at the show, major German manufacturers, with the exception of Volkswagen, will be completely absent.
The show has been losing a battle with a far bigger and more enticing conference held in Las Vegas in January — the Consumer Electronics Show (CES), where car makers have been making important announcements in recent years.
Rising prices for steel and aluminum, a consequence of steep tariffs the United States has imposed on major trading partners, are squeezing bottom lines.
And an economic slowdown in China is threatening consumer spending on big-ticket items, while rising US interest rates and car prices are making monthly payments more expensive and new cars less attractive.
Jonas also predicted car companies would announce lower profit forecasts, as the industry is mired in an uncertain global economic and political climate.
– Gloomy sales forecasts –
North American consumers have been on a car buying binge for several years, but even here the makeup has changed, favoring trucks and SUVs with dwindling sales for smaller models.
Sales rose 1.8 percent in 2018 compared to the previous year, for a total of 17.3 million vehicles.
But sales growth last year was helped by massive US tax cuts and those effects are expected to wane in 2019, said Jonathan Smoke, chief economist for Cox Automotive.
“While 2018 was a very strong year for both the economy and vehicle sales, it will be nearly impossible to repeat,” Smoke said in an analysis.
As a result, car makers were expected to pull back spending. Some could examine the need for plants producing out-of-favor small cars and sedans, said industry analyst Jessica Caldwell of Edmunds.
GM already announced plans for plant closures and layoffs, and could slash costs further. Ford also plans to reduce its global workforce, and other major brands could be next. Tens of thousands of jobs are at stake around the world.
GM will hold an investors conference Friday, when CEO Mary Barra will announce the company’s financial targets for 2019.
– ‘Less exciting’ –
Perhaps a symptom of the Detroit show’s fall from grace, the GM conference, traditionally held at the auto show ever year, will instead be in New York.
The Detroit auto show “has become less exciting, it is not the highlight of the auto shows anymore,” Caldwell said.
“There is no big marquee product that everyone will be talking about.”
However, Ford and Germany’s Volkswagen are expected to announce a strategic alliance, including autonomous and electric cars, at the show on Tuesday, a source familiar with the matter told AFP.
That alliance between auto giants will be closely watched, especially after Ford’s decision last year to phase out many sedan models in North America.
Organizers are moving the Detroit show to June, hoping it will help revitalize interest. This year’s 30th anniversary gathering will be the last held in winter.
The show still attracts nearly a million people every year, and organizers hope to build on its popularity.
Brian Moody of the car search site Autotrader says the Detroit auto show is still relevant, because it is where the most consumer-ready technologies are revealed.
“They are going to display technologies that have a little more practical usages,” Moody said. “It’s the kind of things that you can see and have today.”
The North American International Auto Show opens Monday in Detroit — first to the press, and then to the general public January 19-27.
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