Detroit Auto Show: Automakers Won't Party Like it's 1999
Smiles, record sales, surging profits.
There hasn't been this type of energy at the Detroit Auto Showin years. To quote Chrysler CEO Sergio Marchionne, "It's a different world. It's like a throwback to the 90's. This is the kind of atmosphere we used to have at the Detroit Auto Show when things were going well."
Hmmmm. I'm not sure that's a good thing or a bad thing.
Yes, back then the U.S. auto industry was racking up huge profits pumping out big SUV's powered by cheap gas. Detroit's automakers were defiant whenever someone suggested the Big 3 should be worried about not getting their costs lower. Yeah, we know what happened a few years later.
So as I walk around the Detroit Auto Showand see everyone smiling and patting each other on the back, I can't help wondering if people are getting a little too giddy. After all, Europe is still a mess, consumer confidence is better but not great, and Detroit still skews toward trucks and SUV's which could suffer if gas prices jump over $4 a gallon.
But automakers say 2012 will be unlike 1999 because they are far leaner, there's less of a gap between the best and worst models (yes, Detroit is now every bit as competitive in small cars and mid-size sedans), and with the average car on the road still over 10 years old, there's plenty of pent-up demand to drive demand.
There's something else that makes 2012 different from 1999.
The recent memory of how close the auto industry came to imploding. Alan Mulallysays that memory reminds everyone why they can't afford to make the same mistakes as in the past. Will automakers avoid the rich incentives that goosed sales but cut into profits? Marchionne tells me, "None of us are doing anything that I consider to be commercially stupid things, which will ultimately undermine the longevity of this business. That's the real bloody problem that we've had here. You're not going to see that anymore."
For Detroit's sake, let's hope he's right.