Can U.S. Hybrids Beat Japanese Competition?

Jan. 12, 2009— -- This year's Detroit auto show presents an opportunity for American automakers to not only tout new energy-efficient vehicles but also to convey another message: When you think innovation, think domestic.

Amid the somber reality that auto sales in the United States are likely to drop this year, automakers are unveiling new models they hope will spur some excitement among environmentalists and consumers.

But no matter how hotly anticipated these cars might be, the question remains as to whether this newest generation of energy-efficient cars can race past their Japanese counterparts when it comes to sales.

One of the most talked about cars at the annual North American International Auto Show, which started Sunday, was Ford's Hybrid Fusion. Said to be the most fuel-efficient car in the United States, the Fusion gets 41 miles to the gallon.

But what may set it behind its Japanese competitors is that the Fusion is only two years old, compared with the popular Honda Insight, which has been around for nearly a decade and is consequently more visible among shoppers.

Japan's head start might come as a bit of a surprise to some. Hybrid technology was actually the brainchild of General Motors, which developed it years ago. But executives did not believe it would gain popularity, so the U.S. automaker let the patent expire and sold it to the Japanese.

The Asian automakers have also proved more efficient than their American counterparts.

At its U.S. plants, Honda can shift production from a Civic to a sport utility vehicle in five minutes. The same change at a Ford plant would cost $75 million and take 13 months.

"The domestic brands here were starting with factories that were much older and didn't have the flexibility needed at the time they were created," said Jeff Schuster, executive director of global forecasting at ratings firm J.D. Power & Associates.

Flexibility took a back seat for many automakers, who instead chose to focus on acquiring other high-end companies. One of those top buyers, Ford, acknowledged that mistake.

"They bought a number of brands like Aston Martin, Jaguar and Land Rover, Mazda and Volvo ... and Ford in the United States really became a truck company," said Alan Mulally, president and chief executive of Ford.

Focus on Gas Guzzlers

Ford focused its attention on the Explorer SUV, while GM spurred production of the Yukon and Tahoe, also SUVs.

The gas guzzlers were an easy sell in the 1990s, but add the rising price of gas in recent years and the today's slowing economy, and you get a combustible combination for domestic automakers.

While U.S. automakers were focused on large vehicles, their Japanese competitors spent money on fuel-efficient cars, such as Honda's Civic and Accord, and Toyota's hybrid Prius.

It is no wonder, then, that many Americans still associate innovation with Japanese automakers.

"I would probably think a Japanese car would be more fuel-efficient," said one Detroit residence, representing the thoughts of many others at the auto show.

No Auto Show Giveaways

American companies claim they are finally getting it right.

GM's new Volt is winning accolades from critics, as is the Ford Fusion.

Ford's Mulally is also promising a different, more efficient focus in the future.

"What you're seeing is Ford's commitment to a long-term viable business based on quality, fuel efficiency, safety and the best value," he said.

The North American International Auto Show runs through Jan. 25. But the mood is somber and celebrations there will likely be muted compared with past years. No free food, no alcohol and no what some consider the most prized possessions from any car show -- giveaways.