Pall Hangs Over Detroit Auto Show

Jan. 11, 2009 — -- It's the unspoken topic of this year's North American International Auto Show: How are struggling carmakers going to convince tapped-out consumers that their cars are worth buying?

"The mood here is a nail-biter," said Jean Jennings, president and editor-in-chief of Automobile Magazine. "The only car segment that had growth was small cars and that growth went to nothing the minute gas was under $3 a gallon. Nobody is selling anything right now. What is the problem? It's a credit problem."

A credit problem combined with an economic crisis contributed to a 30 percent decline in auto sales last month and a 20 percent decline in sales for 2008.

"We are looking at sales dropping even further next year," said Chris Denove, vice president of J.D. Power & Associates. "Sales could be down to 11 or 12 million units. You've got to go back to 1982 before sales were that low, and when you think about it, there were a lot fewer drivers on the road then."

The Detroit auto show has often been a time for the auto industry to shine and flex its muscles, but with sales so weak, this year will be different.

"This year the vibe isn't going to be that strong. Its going to be more of a get-back-to-basics," said Denove. "It's going to be about business. It's going to be about the cars. You're not going to see as many dancing girls and light shows. Part of this is that Detroit and the automakers want to give the impression that they are being serious, but the reality is they just don't have a lot of money to spend on the show this year."

And with U.S. automakers at the mercy of taxpayer bailout funds, the pressure to make cars Americans want is high.

Congress and President-elect Barack Obama are demanding that car companies invest in more fuel-efficient and green technologies. Not everyone who follows the industry thinks that's a good idea.

"Government is on the wrong track because they are dictating fuel economy without energy policy," Jennings said. "If gas is cheap hybrid vehicles are not going to sell. And yet they are forcing the car companies to spend billions of dollars in development cost for a technology that might be way ahead of what people want and won't intersect."