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After grim year, Detroit attempts a happy face


United States Secretary of Transportation Ray LaHood speaks to the media at the 2010 North American International Auto Show during press days in Detroit, Michigan, January 11, 2010. REUTERS/Mark Blinch (
United States Secretary of Transportation Ray LaHood speaks to the media at the 2010 North American International Auto Show during press days in Detroit, Michigan, January 11, 2010. REUTERS/Mark Blinch (

By Nick Carey

DETROIT (Reuters) - U.S. auto executives and elected officials at the Detroit auto show on Monday sought to draw a curtain on a year of appalling sales and massively unpopular government aid.

"This is a new day," said U.S. Transportation Secretary Ray LaHood, who spoke at the opening of the annual show. "Today is a new day. Today is a new beginning, really."

"The auto industry is back," he added.

Following a disastrous year that saw GM and Chrysler LLC

<FIA.MI> forced into government-led bankruptcy, many executives said 2010 should be much better.

Ford Chief Executive Alan Mulally described analyst forecasts for U.S. light vehicle sales of between 11.5 million and 12.5 million units this year as "conservative.

U.S. auto sales plunged to 10.4 million units in 2009, or 39 percent below a peak of 17 million in 2005 during the recent ill-founded economic boom. The big, unanswered question here, however, is what the U.S. economy will do following its longest, deepest downturn since the 1930s.

General Motors Co <GM.UL> Vice Chairman Bob Lutz said while the No. 1 U.S. automaker was aiming for profitability in 2010, that was unlikely if the U.S. economy took another downturn.

"Then, of course, all bets are off," he told Reuters Insider.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Reuters Insider interview with GM's Bob Lutz:

http://link.reuters.com/kag82h

Also on Reuters Insider:

After Grim 2009, U.S. Car Sales Can Only Go Up, Analyst Says:

http://link.reuters.com/nec82h

Ford Exec Says Automaker to Build on Momentum:

http://link.reuters.com/qes82h

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

It is just over a year since America's automakers went to Washington amid the worst sales slump in decades to seek emergency government funding.

For an American public already in a hostile mood following the injection of taxpayer money into the over-leveraged and profligate U.S. financial sector, this was a bailout too far.

'A LITTLE BIT OF AN INFUSION'

Anger over the automakers' pleas for aid was heightened by revelations they had used expensive corporate jets to travel to Washington to cry poverty. If nothing else, it was an ignominious moment for the U.S. auto industry.

In a flash of humor at the show, that dark moment in American car history was honored by local company Great Lakes Coffee, which served its own "Bailout Blend" coffee.

In 2009 the U.S. government pushed both GM and Chrysler into bankruptcies, supplying cash while the automakers were forced to cut thousands of jobs, shutter plants and slash their dealer networks to adjust to a smaller U.S. auto market.

The U.S. government now holds stakes in both companies and Chrysler is controlled by Italian automaker Fiat.

Neil De Koker, CEO of the Original Equipment Supplier Association which represents auto suppliers, said the bailout of automakers and suppliers cost U.S. taxpayers $120 billion.

"This was a good investment of taxpayer dollars in an industry that needed a little bit of an infusion of resources," LaHood said in defense of that aid.

LaHood was one of several U.S. officials on hand for the opening of the auto show, as were House Speaker Nancy Pelosi and members of the Michigan congressional delegation.

"They made a great investment in GM," said GM's chairman and acting chief executive, Ed Whitacre. "We're going to pay them back and exceed their expectations. GM is back."

Sales at GM fell 29.7 percent -- compared with an industry-wide drop of 21.2 percent in 2009 -- while Chrysler sales plunged 35.9 percent.

In a sign of the times, Pelosi and other elected officials held a luncheon at the auto show and enthused that a better, brighter future begins now.

"This is so exciting for our country," Pelosi said. "It's a renaissance, it's a rebirth, it's a phoenix," Pelosi said.

Ford, which did not take government aid, saw sales fall 15.3 percent. The company got an additional boost on Monday when it swept the 2010 North American Car and Truck Awards.

The Ford Fusion Hybrid won "car of the year" and the Ford Transit Connect triumphed in the truck category.

GM came in for praise for its restructuring plan.

Mike Jackson, CEO of the largest U.S. auto retailer AutoNation Inc <AN.N> said GM will be a "great comeback story," adding the automakers' GM's government-appointed CEO Ed Whitacre has done a great job.

"He's an outstanding executive who takes complex issues and reduces them common sense with no bullshit and that's refreshing," he said.

As for Chrysler, analysts like John Casesa, managing partner of Casesa Shapiro Group LLC, said that the jury is still out on whether the bailout will prove successful.

With the outlook for 2010 sales still uncertain, many automakers used the Detroit show to tout upcoming electric car technology, an area that the U.S. government has backed with subsidies and low-cost loans.

Others, however, warn that it will take a long time to get American consumers used to the concept of electric cars.

"European people are ready to switch, but it will need time to change," said Gildo Pallanca Pastor, CEO of Monaco-based electric sports car maker Venturi. "Conventional cars have been around for more than a century -- it's not going to change in five minutes."

Other executives mostly from non-U.S. automakers gave a more conservative view, warning against prematurely deciding that the U.S. recession -- which has battered consumers, left 10 percent of Americans unemployed and wiped out trillions of dollars in home equity -- is over.

Hyundai's U.S. sales chief David Zuchowski said for the market to truly rebound, the U.S. unemployment rate must improve.

Zuchowski said the Korean carmaker, whose U.S. sales rose 8 percent in 2009, sees U.S. 2010 sales between 11 million and 11.5 million units, significantly below analyst forecasts.

"In 2009, we discovered we have a new competitor that we have never dealt with before, and it's savings," Jim McDowell, American head of BMW's <BMWG.DE> Mini unit, told Reuters. "Anything that throws major elements of uncertainty in front of the consumer are the kinds of things that could depress sales."

"But ultimately sales will increase because the car fleet is getting older and older," he added.

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