Posted on: Jan 22, 2012
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Detroit’s Big Show Wasn’t Just a Masquerade Ball


The 2012 NAIAS demonstrated the new vitality of the American car industry.
On Sunday, the Big Detroit Masquerade ball, also known as the 2012 NAIAS, comes to its conclusion when the gates of the Cobo center will be closed for this year's event. That ball will be remembered for years to come as an outburst of optimism from one of the most depressed sectors of the American economy, the automotive industry. Throughout the event, the industry, its supporters and fans, indulged themselves in all kinds of illusions and hopes. Cadillac takes on BMW? A no brainer.
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Chrysler will sell an Italian disguised car as an American compact? In mid-2012 it will be a reality; Lincoln to perform a spectacular comeback? Right away it is happening. The American car industry stands once again, without the administration either by stealth or by overt support, on its three main pillars? You bet. Small American car manufacturers are inventing the plug-in hybrid car and the electric car? Well, we always led the world in R&D. There were never happier days to the American car industry than the last 14 at Detroit.

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Even the statistics coming from Polk claim that the average age of a vehicle on American roads has been increased to a record 10.8 years. This is a decent cause to party; at least if one thinks that the last few years' slowdown is to blame for that troubling trend. However, Polk's statistics indicates that the trend for aging cars is not a result of the latest recession but a long term development going back to at least 1995. Back then a vehicle's average age was 8.4 years. Since then, life expectancy of vehicles rose by almost 25 percent despite soaring sales during the first half of the previous decade.
Last year the number of vehicles on American roads rose to 240.5 million, a half a million increase from the year before. The optimism powder that was sprinkled over the event can be attributed to the unprecedented, positive coverage in all media channels. The reporters themselves were in good mood after they just finished digesting the industry's latest statistics that showed a 10.8 percent increase in vehicles sales in the American market the previous year and a bigger than average sales increase for the Big Three. This result, however, is probably temporary.
The Japanese manufacturers suffered last year a double whammy with the earthquake and tsunami and the floods in Thailand, while growth of brands like Kia and VW exceeded the locals. Additionally, sales of the local manufacturers are still biased toward gas guzzlers. A remarkable feature in the industry is the adoption of European car philosophy by the American automakers. The Dodge Dart is based on an Italian-sourced platform and the Cadillac ATS is eager to beat the BMW 3-Series in a duel of the compact luxury segment. The Ford Fusion is the American version of the European designed Mondeo and the Focus is essentially a European designed car.
That trend can be explained by the downsizing of the American car and the expertise of European carmakers in that segment. There was also a lot of politics involved in the show as state governors and administration officials descended on the show. The US Secretaries of Energy and Transportation both attended along with the administrator of the Environmental Protection Agency. "I sense a new energy in this industry, and I'd like to believe we're part of that energy," said Governor Jay Nixon of Missouri to the NYTimes.com.
"If I can make a little bit of a difference by representing six million Missourians with my presence here, it's worth it." Ford and GM recently announced plans to invest $1.5 billion in plants in Missouri. "Our government leaders are asking us what they can do to create an environment where businesses can grow," said Alan Mulally, Ford President and CEO. So it was excellent news when towards the end of the show the news was announced that automakers will add thousands of jobs to their workforce. Last year 12.8 million cars were sold. This year the industry expects sales of 13.8 million.
There is a shift towards made in America cars thanks to currency exchange rates and trading conditions. And also the declining wages of American workers helps to convince employers that America should be considered as a manufacturing base. So maybe, after all, it wasn't just a masquerade ball?

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