Detroit Hosts Auto Show Amid Bleak Outlook

[Judi Lynn]

Detroit Hosts Auto Show Amid Bleak Outlook
Fri Jan 7, 2005 11:31 AM ET


By Tom Brown
DETROIT (Reuters) - After another brutal year, Detroit's automakers will put on a brave face as they play host to arch-rivals led by Toyota Motor Corp. at the North American International Auto Show opening on Sunday.

But many analysts say Detroit's Big Three are also getting ready to roll out some disappointing 2005 earnings outlooks, in a sign of more tough times to come in the new year.

The auto show, in a downtown convention center brimming with sheet metal, is all about product. And executives from General Motors Corp., Ford Motor Co. and the Chrysler side of DaimlerChrysler AG will use it to highlight the new or substantially redesigned vehicles they hope to support their market share going forward.

New models from the Big Three are unlikely to generate as much excitement as in previous years, however. To some, barring major surprises, it may even seem like the Motor City is running on empty.

The show kicks off another year of cutthroat competition in the auto industry. Dark storm clouds on the horizon for Detroit include high retiree and health care costs, shrinking market share and a meager profit outlook. Some industry insiders insist these are sapping confidence in the Big Three as perhaps never before.
(snip/...)

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=7267785

[liberal N proud]

1. But we have turned the corner said bush

2005 will be a very prosperous year says Pat Robertson
They surely can't be wrong, Can they?

[MindPilot]

2. they could start by giving people a reason to buy one

with the notable exception of the the T-Bird & Mustang, most of the offerings from both Detroit and Toyoko are butt-ugly black-box-equipped gas suckers.

[Mist]

3. What about the Ford Escape?

I think that's what it's called. A small SUV HYBRID. I'd be interested in that. Surely the market for guzzlers has peaked?

[EOTE]

4. Yeah, the hybrid version of the Escape.

V6 acceleration and towing with 4 cylinder fuel economy. Should be quite cool. In addition, GM will be showing off some full size trucks featuring hybrid systems. I'm a bit more interested in GMs sport offerings though; The CTS-V, the new STS, the C6 Corvette, the Caddy XLR and the new GTO.

[leesa]

7. Why would you want to support Ford? They are major GOP folks.

Their hybrid engine is from Toyota. Why not buy from the ones that know what they are doing?

[Mist]

9. Good point!

I'm not much of a motorhead--before buying a new vehicle I would do some research. Just happened to hear about the hybrid Escape a few days ago. I drive a Ford Escort wagon (5 years old) now, and for an economy car, it's a real bargain.

[ahimsa]

5. According to the article, the problem is our workers' health care

Excerpt from Article 

Among major unanswered questions, it remains to be seen what the car companies will do about massive pension and health care liabilities. David Cole, head of the Ann Arbor, Michigan-based Center for Automotive Research, says these liabilities have saddled the Big Three as a group with a $2,000 to $2,500 cost disadvantage versus their rivals for every vehicle they make.

"The real 500-pound gorilla in the local zoo is the uncontrolled health care costs," Cole told Reuters.

"It's a horrifyingly complex situation for the industry. It needs to be addressed as quickly as possible as a matter of high urgency," he said.

Gee, I wonder how that will be addressed.

[MadHound]

6. The auto industry shot itself in the foot four years ago

When the recession first started, all of the auto makers immediately went to the "$0 down, o% interest" option. Yeah, it temporarily propped up sales, but they were doing so at the cost of future sales. Now that future is here, and the auto industry is in a serious bind.

On top of that, with oil prices going ever upwards, people are rethinking the idea of buying a gas guzzling SUV. Plus, Detroit iron has been the laughingstock of the industry since the late eighties. It would take one hell of a car to get me to buy a Ford, GM, or Chrysler product again. They are poorly built, inefficient, maintenence heavy vehicles that have a lifespan that is typically 25-40% shorter than a comparible Toyota, Honda or Nissan.

My newest car is a '98 Nissan four banger truck with 75,000 miles on it, and I'm going to drive it until it rusts away. I've never seen the praticality of buying a vehicle every three to five years.

[leesa]

8. Exactly. They build crap and then wonder why sales are down. How many

recalls of these crap products have there been in the last two months?