Whats the Current Hot Trend? The Return of the Passenger Car

In looking at the events of 2003 and the product unveilings at the 2004 North American International Auto Show (NAIAS) in Detroit, Dr. David Cole, president of the Center for Automotive Research, responded to the following questions:

Q. What are the big trends at this years Detroit Auto Show?

Cole: If you look at the trends of the last few years it was trucks and SUVs. Last year, the big news here was the alternative power technology--we saw diesels and hybrids. Theyre still here, but I think the big news here, as Bill Ford said, it is the year of the car. But, it is the year of the car for everyone, particularly for the Big Three.

There were a lot of new introductions; not just introductions of specialty vehicles or low volume vehicles, but really high volume, mainstream vehicles. The examples are the new Ford Five Hundred, the Chrysler 300-C, the Pontiac G6, or the Chevrolet Cobalt, which was actually introduced last week in Los Angeles. There is just a ton of stuff to see. The

Last year the stars of the auto shows were alternative power vehicles, theyre still here, but theyve made way for the year of the car. (Photo: Ford Motor Company)

Q: Will these car introductions help the Big Three stop their market share erosion? And, whats your opinion of the foreign automakers saying that theyve increased their sales without resorting to incentives?

Cole: Im not sure that the phrase "without incentives" is very accurate because every manufacturer, both foreign and domestic, has a variety of incentives, whether its low interest financing, rebates or dealer incentives. The international manufacturers have tried to avoid direct incentives, but they all provide major dealer incentives that in turn can be applied

There were a lot of new introductions; not just specialty cars, but really high volume, mainstream vehicles. (Photo: NYIAS 2003 Trevor Hofmann, American Auto Press)

Market share erosion will be tough to stop because there is so much more product coming into the traditional segments that the Big Three had to their own. For example, when you look at Toyota and Nissan and their large pickup trucks and large sport utility vehicles, thats a different situation than we saw in the past.

At the same time, there is hope for the Big Three because they have so many new cars coming in high volume areas where they have been a little bit weak in the last few years. So, its going to be a real dogfight and well have to see what happens.

Q: Can General Motors, Ford and DaimlerChrysler be profitable with whatever market share they end up with?

Cole: If youre not profitable in this business, then youre not going to stay in business. Weve talked about market share a lot in the last couple of years

With Nissan and Toyota both bringing pickup trucks and large sport utility vehicles to the market, market share erosion of the Big Three will be tough to stop. (Photo: NAIAS 2003 Trevor Hofmann, American Auto Press)

Q: And whats going on with the Center for Automotive Research?

Cole: Well were busy, if somewhat chaotic. We spun off as a totally independent not-for-profit last spring and our former parent, Altarum, provided us with a line of credit, but we havent had to tap that. So, weve been successful beyond what we had anticipated. Were in temporary quarters and we will be moving to larger ones. I think our success has been dependent upon the extreme turbulence weve seen in the industry. A lot of people are trying to understand where the industry is going.

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