With the opening of the North American International Auto Show in Detroit only weeks away, officials at Detroit auto companies are worried about — and girding for — what they predict will be inflammatory newspaper headlines and analysts' comments about the vehicles they unveil at the show.
All vehicles have life cycles, and, unfortunately for General Motors and, to some degree Ford, the time is now — now when both companies are struggling financially, gas prices remain high, and Japanese automakers are introducing hybrids — to redo their large sport-utility vehicles, with their large pickup trucks to follow.
GM is rolling out a completely new line of full-size SUVs beginning with the Cadillac Escalade family (which also includes the Escalade ESV and EXT), followed by the Chevrolet Tahoe, Suburban and Avalanche, and the GMC Yukon portfolio. The redesigned full-size Chevrolet Silverado and GMC Sierra pickups come after the SUVs are launched. Ford, meantime, will unveil a freshened Expedition and Lincoln Navigator in 2006.
The automakers face a damned-if-they-do, damned-if-they-don't dilemma.
On one hand, they need to promote their vehicles heavily, and auto shows are a great kick-off venue. Yet, loud promotion may also draw negative attention, which has prompted some officials inside the auto companies to consider playing down their new large SUVs.
Yet, these are incredibly important vehicles for both of them, especially GM. So it is critically important to get them off to a fast start. In fact, GM's future, rather bleak at the moment, relies largely on a solid sales launch of its SUVs. The automaker will focus on the improved fuel economy of its new SUVs, thanks, in part, to a new six-speed automatic transmission.
While high gas prices have cut into the sales of large SUVs from every automaker, nevertheless, they still represent a good market. A good number of consumers continues to buy them. And while slower sales and increased competition have reduced profits, big utes still represent hefty returns for Detroit automakers. They'd be foolish to abandon the market.
The sales and profit potential of the market, in fact, has not been lost on Detroit's competitors, including the Japanese — particularly Toyota and Nissan. Toyota will introduce its next-generation Tundra pickup in 2006 and later the Sequoia SUV upon which it is based. The Tundra, to be built in Texas at a new plant capable of building double the current sales volume, is expected to be bigger and badder than the current one. Nissan, of course, already builds its full-size Armada SUV and Titan pickup in Alabama, with word being Nissan is looking at an even heavier-duty version of its Titan to compete with Ford's Super Duty.
Yet, relatively high gas prices persist, and the perception, true or not, is that the Japanese lead in building fuel-efficient vehicles. The Japanese automakers reinforced that image at the Tokyo Motor Show in October where every one of them — large to tiny — displayed its latest advances in hybrids and/or fuel cells.
Some of those concepts are being brought from Tokyo to be displayed down the aisle from the GM and Ford exhibits in Detroit.
Subaru, from which GM recently broke its ties (Toyota has stepped in as its partner), will display its B5-TPH concept unveiled in Tokyo. The innovative Outback-based hybrid is a two-door sport wagon/sport-utility crossover with all-wheel drive. It is equipped with a powertrain that Subaru calls a Turbo Parallel Hybrid. It consists of a turbocharged 2.0-liter, four-cylinder engine that is horizontally opposed under the hood and is combined with electric motors and advanced lithium-ion batteries, versus nickel metal hydride. Subaru plans to sell its first hybrid vehicle in 2007 in Japan, though its plans could be accelerated with Toyota in the mix now, company sources told Inside Line.
Honda will show its FCX concept in Detroit, showcasing its latest generation of fuel-cell technology installed in a premium sedan. Honda claims the system delivers more power in less space, with the fuel cell occupying a layer beneath the floor to allow for a roomy interior and short front end. The hydrogen fuel tanks expand storage capacity over previous tanks not by increasing pressure, but via a newly developed hydrogen-absorption material inside the tanks, which doubles fuel capacity and extends the vehicle's range to 350 miles. Three energy-efficient motors — one in the front and two in the rear — deliver power to all four wheels.
The juxtaposition of Japan's hybrids and fuel cells with Detroit's large SUVs undoubtedly will prompt industry pundits to point out the dire straits GM and Ford are in and accuse them of being out of step with the times — dinosaurs — by introducing big gas-guzzling vehicles while Japanese competitors showcase fuel-efficient concepts.
These accusations will only be half true and will not be completely fair.
But, as in life, timing — and perception — is everything in the auto industry. The timing for Detroit to be showing off big SUVs couldn't be much worse.
All vehicles have life cycles, and, unfortunately for General Motors and, to some degree Ford, the time is now — now when both companies are struggling financially, gas prices remain high, and Japanese automakers are introducing hybrids — to redo their large sport-utility vehicles, with their large pickup trucks to follow.
GM is rolling out a completely new line of full-size SUVs beginning with the Cadillac Escalade family (which also includes the Escalade ESV and EXT), followed by the Chevrolet Tahoe, Suburban and Avalanche, and the GMC Yukon portfolio. The redesigned full-size Chevrolet Silverado and GMC Sierra pickups come after the SUVs are launched. Ford, meantime, will unveil a freshened Expedition and Lincoln Navigator in 2006.
The automakers face a damned-if-they-do, damned-if-they-don't dilemma.
On one hand, they need to promote their vehicles heavily, and auto shows are a great kick-off venue. Yet, loud promotion may also draw negative attention, which has prompted some officials inside the auto companies to consider playing down their new large SUVs.
Yet, these are incredibly important vehicles for both of them, especially GM. So it is critically important to get them off to a fast start. In fact, GM's future, rather bleak at the moment, relies largely on a solid sales launch of its SUVs. The automaker will focus on the improved fuel economy of its new SUVs, thanks, in part, to a new six-speed automatic transmission.
While high gas prices have cut into the sales of large SUVs from every automaker, nevertheless, they still represent a good market. A good number of consumers continues to buy them. And while slower sales and increased competition have reduced profits, big utes still represent hefty returns for Detroit automakers. They'd be foolish to abandon the market.
The sales and profit potential of the market, in fact, has not been lost on Detroit's competitors, including the Japanese — particularly Toyota and Nissan. Toyota will introduce its next-generation Tundra pickup in 2006 and later the Sequoia SUV upon which it is based. The Tundra, to be built in Texas at a new plant capable of building double the current sales volume, is expected to be bigger and badder than the current one. Nissan, of course, already builds its full-size Armada SUV and Titan pickup in Alabama, with word being Nissan is looking at an even heavier-duty version of its Titan to compete with Ford's Super Duty.
Yet, relatively high gas prices persist, and the perception, true or not, is that the Japanese lead in building fuel-efficient vehicles. The Japanese automakers reinforced that image at the Tokyo Motor Show in October where every one of them — large to tiny — displayed its latest advances in hybrids and/or fuel cells.
Some of those concepts are being brought from Tokyo to be displayed down the aisle from the GM and Ford exhibits in Detroit.
Subaru, from which GM recently broke its ties (Toyota has stepped in as its partner), will display its B5-TPH concept unveiled in Tokyo. The innovative Outback-based hybrid is a two-door sport wagon/sport-utility crossover with all-wheel drive. It is equipped with a powertrain that Subaru calls a Turbo Parallel Hybrid. It consists of a turbocharged 2.0-liter, four-cylinder engine that is horizontally opposed under the hood and is combined with electric motors and advanced lithium-ion batteries, versus nickel metal hydride. Subaru plans to sell its first hybrid vehicle in 2007 in Japan, though its plans could be accelerated with Toyota in the mix now, company sources told Inside Line.
Honda will show its FCX concept in Detroit, showcasing its latest generation of fuel-cell technology installed in a premium sedan. Honda claims the system delivers more power in less space, with the fuel cell occupying a layer beneath the floor to allow for a roomy interior and short front end. The hydrogen fuel tanks expand storage capacity over previous tanks not by increasing pressure, but via a newly developed hydrogen-absorption material inside the tanks, which doubles fuel capacity and extends the vehicle's range to 350 miles. Three energy-efficient motors — one in the front and two in the rear — deliver power to all four wheels.
The juxtaposition of Japan's hybrids and fuel cells with Detroit's large SUVs undoubtedly will prompt industry pundits to point out the dire straits GM and Ford are in and accuse them of being out of step with the times — dinosaurs — by introducing big gas-guzzling vehicles while Japanese competitors showcase fuel-efficient concepts.
These accusations will only be half true and will not be completely fair.
But, as in life, timing — and perception — is everything in the auto industry. The timing for Detroit to be showing off big SUVs couldn't be much worse.
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