Wednesday 24 January 2018

Wheels are turning but numbers still smaller

On show in Detroit: The hot new BMW Z4
On show in Detroit: The hot new BMW Z4

Peter Quinn and Andrew English in Detroit

ALL of a sudden the motoring world is getting smaller -- the cars and the numbers buying them.

But there is no doubt the scaling down in size has sparked an upscale in thinking because they have to become super-relevant again.

And smaller cars, be they petrol, diesel, hybrid or electric are the future -- for now.

The industry is smaller, poorer and much chastened after a turbulent year. For example, overall US car and light truck sales were down 21pc to just 10.4 million in 2009, from a high of more than 17 million in 2006.

In fact America scrapped more cars than it sold last year. While the government's short-lived cash-for-clunkers scheme is acknowledged to have prevented a complete sales collapse, as in Europe, the real winners were makers of smaller, cheaper car such as the Korean firms of Hyundai and Kia and Subaru, with its range of small utilities. The big three American car makers, together with the grandee Japanese manufacturers such as Toyota, Honda and Nissan, all lost sales.

After a two-month hangover from the effect of the scrappage tax (which is only beginning in Ireland) US car sales did pick up a little at the very end of last year. But with unemployment still running at about 10pc and credit still hard to come by, the car makers are being cautious about a return to the high old days.

And there's life in the industry yet, with new models from Ford (new Focus), VW (a concept coupé), Mercedes-Benz (E-class cabriolet), and even General Motors with the production version of the Volt, an extended range battery hybrid -- it will be called Ampera in Europe.

General, which was the world's largest car maker, went into US bankruptcy protection last year and was bailed out to the tune of about $50bn by the US taxpayer. It closed its Saturn and Pontiac divisions, sold Hummer, is closing or selling Saab and almost sold Opel/ Vauxhall. Last year it sold 30pc fewer cars and though it has started to pay off the government loan under new CEO Ed Whitacre, the company's former finance arm GMAC recently required another billion- dollar injection from the state.

Chrysler, the smallest and least competitive of America's car makers, had been bought by Daimler in 1998 for $36bn, sold in 2007 to private equity group Cerberus for $7.4bn, then put into bankruptcy and sold out of it to Fiat. Under its new CEO, Sergio Marchionne, Chrysler's products are being radically merged with Fiat's European model line-up, but the US arm is by no means out of the woods.

Over at Ford, CEO Alan Mulally's $23bn mortgage spree in 2006 was paying off and the company wasn't forced into Barack Obama's car-making bankruptcy sausage machine, merely requiring a $9bn line of credit to tide it over. It has sold Aston Martin, Jaguar Land Rover and Volvo to concentrate on blue oval cars.

The strategy is working so far. Ford had the least horrendous 2009 of all the "big three". Ford sales dropped 15pc overall last year, but picked up well at the end, with strong sales of its smaller cars. It arguably has the star of this year's show as well, with the debut of the new Focus, which goes on sale next year across the globe in basically the same form.

Other significant motors on show include a lighter Audi e-tron, Volkswagen's new hybrid Jetta coupe, Honda's CR-Z production , a fast and furious version of the BMW Z4, a V8 Ford Mustang, a Mercedes CLS design sculpture and the major public debut for the Audi A8. BMW showed off the Mini Beachcomber while Toyota's FT-CH hybrid is seen as a 'baby' Prius.

It also emerged that Toyota has set up a division to accelerate developing next-generation batteries.

Also noticeable by its sheer presence at the Detroit show will be a new display designed to highlight the latest in green technology and alternative-power sources -- entitled "Electric Avenue".

The 37,000sq ft display is intended to shine a spotlight on 20 vehicles all powered by new technologies, such as advanced batteries or photo-voltaic cells.

Irish Independent

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