Detroit show lays a gloss over industry concerns

They say that when the US car industry catches the flu, the city of Detroit gets pneumonia

They say that when the US car industry catches the flu, the city of Detroit gets pneumonia. Michael McAleer, Motoring editor, reports.

If you were to judge the state of US car firms by wandering the streets of Motor City then the situation looks grim.

Detroit is showing the effects of the trouble and turmoil of its most famous industry. The home of Henry Ford, General Motors and Chrysler is now leading the US in terms of declining urban populations.

Some 26.1 per cent of its population is below the poverty line while figures from a government literacy study in 1998 claim 47 per cent of the population are "functionally illiterate". It consistently ranks in the top five US cities for murder rates.

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While this week's motor show was full of the pomp and fanfare one expects from an American production, you only have to scratch the surface to uncover the problems.

As the show opened on Sunday, protesters from the autoworker unions demonstrated about pending wage and job cuts in the industry.

The promises of reform and a renewed offensive on the market from the so-called Big Three - Ford, General Motors (GM) and Chrysler - have been heard every year at Detroit in recent times.

Yet this year, you get the impression that they mean business. In fairness, Chrysler has already turned its business around.

Ford is in the midst of reforming its product range and GM is restructuring its production plants.

Ford is due to announce further details of its "Way Forward" recovery plan, including plant closures, on January 23rd.

Bill Ford, great grandson of the company's founder Henry Ford, said the plan "is going to be painful for some people" and might include the departure of some top managers.

The future, of course, does not simply depend on revamping the management line-up.

A car firm is all about its line-up. All three launched various concept versions and new models of all sizes, shapes and functions.

While many of them will never make their way to European markets, there is increased attention on US brands with the imminent arrival of Dodge and Cadillac to the Irish market in the coming months.

Dodge will return to Ireland after a 50-year absence, starting with its new Caliber and Nitro models, while Cadillac is set to bring the CTS and BLS to our shores during 2006.

At the Detroit show, Dodge revealed a concept version of its famous Challenger model, reportedly due to go into production in 2008.

The car has not been on sale since 1983. The concept has the 6.1-litre Hemi V8 coupled to a six-speed manual transmission, and borrows many styling cues from the original 1970 model.

Sister company Chrysler also introduced a concept, the Imperial, which bears a remarkable similarity to the Rolls Royce Phantom and no doubt will have designers of the prestige British model rather annoyed.

It comes complete with rear-opening "suicide doors" and a large front grille, but it's still too early to say whether it will ever make it on to the forecourts.

Meanwhile, from the European brands, Mercedes launched its new GL-Class, a full-size SUV that will suit the Americans but will also be sold in Europe.

Similar to the new M-Class at the front, it has a significantly larger rear with a taller cabin and more bootspace.

Mini introduced the latest version of its Mini Traveller concept, confirming it will go into production.

Parent company BMW, not to be outdone, introduced its new M version of the Z4.

For all the talk of an American revival, the show opened on a disappointing note for the American brands.

In its first hour, the awards for car and truck of the year went to Honda's Civic and Ridgeline SUV respectively.

That's just one of the Japanese brands that are increasingly making an impression on the US market. The biggest threat comes from Toyota, which plans to topple GM as the world's largest car producer by the end of the year.

Already its Camry is the best-selling saloon in the US. Toyota's luxury marque, Lexus, also introduced its new flagship model the LS460, set to replace the current LS430 model.

GM and Ford are fighting off the foreign brands on their home turf, but are also having to deal with symptoms of their declining market shares along with ill-judged agreements on pensions and healthcare that are coming home to haunt them.

The end result has been a downgrading of the firms' credit ratings and weak stock prices, reflecting Wall Street's doubts about the outlook for recovery.

According to Bill Ford: "It's up to us to prove the Wall Street analysts wrong."

The financial investors, it seems, see the likes of Toyota as being in a much stronger position to take the lead in the US and world markets.

While the US brands promise a product offensive over the next few years, Toyota is already planning 12 new or updated models for launch in 2006.

But it's not just the Japanese - and to a lesser extent the Koreans - that are concerning the US firms. The Chinese are set to enter the market within the next two years, offering similar-sized models as US brands but at two-thirds the price.

Still there is hope. This year's product and restructuring offensive may just work and even Detroit is getting a touch of the spotlight in the coming weeks as it hosts this year's Superbowl football final.

However, just as hosting a high profile sporting event will not deal with Detroit's deep-rooted problems, the shiny new metal from its local manufacturers may not be enough to deal with their deep-seated financial problems.