General Motors Corp. promised to make a hybrid car that travels 40 miles on a six-hour charge from a household electric outlet before its flex-fuel gasoline engine kicks in. Ford Motor Co. introduced a redesigned Focus compact with a voice-activated music player to attract young buyers.
Meanwhile, according to a Bloomberg News report, Toyota Motor Corp. showed off a five-passenger, 381-horsepower pickup, while the star of Honda Motor Co.’s presentation was a sports car with a V-10 engine.
U.S. and Japanese automakers have traded places at this week’s North American International Auto Show in Detroit. The Americans, trying to wean themselves from the gas-guzzling pickup trucks and sport utility vehicles they pushed in the 1990s, have rediscovered the car and fuel economy. The Japanese are going for the big and powerful.
“It’s ironic to see these roles being reversed,” said Rebecca Lindland, a market analyst for forecaster Global Insight Inc. in Lexington, Mass. “Detroit automakers need to diversify into cars because they can’t rely on SUVs to prop up their balance sheets any longer. Toyota needs to reach out to pickup buyers in order to continue its expansion.”
Behind the shift is Detroit’s growing, if tardy, realization that gasoline prices that topped $3 a gallon in August have changed American automobile buyers.
“The simple equation ‘The larger the car, the better’ doesn’t apply very much to this market any more,” Dieter Zetsche, DaimlerChrysler AG’s chief executive, said in an interview at the show.
Five years ago, Zetsche said, people would ask what would happen if one of Daimler’s Smart subcompacts disappeared into a pothole in New York City. By Monday (Jan. 8), the company has had 500,000 inquiries about Smart on its website and plans to sell the two-seat mini-car in the U.S. in 2008.
In a survey last week, 89% of auto executives questioned described fuel economy as the top factor when consumers are selecting new vehicles, compared with 58% in 2002. KPMG International, a New York-based accounting and consulting firm, surveyed 150 senior executives at automakers and suppliers in the U.S., Germany, South Korea, Japan, China and other countries.
“If nothing else has become clear in the last 12 months, it’s that we cannot be assured of an uninterrupted supply of oil at a stable price,” Rick Wagoner, GM’s chief executive, told reporters at the show Monday. “That’s a problem for our consumers and for us.”
Detroit’s problem is that it hasn’t developed a car-based profit model that replaces its SUV- and pickup-based strategy of the 1990s. During the first nine months of 2006, GM lost $3 billion and Ford lost $6.99 billion. Toyota earned $10.2 billion.
From 1990 to 1997, Ford earned $13 billion of its $14.6 billion in total profits from a single vehicle, the Explorer SUV, according to a Ford deposition in a rollover lawsuit. Ford sold 179,229 Explorers in 2006, down 25 percent from 2005.