Glitz Returns To Detroit Auto Show

Host Michel Martin discusses trends at this year's auto expo in the Motor City, and what U.S. automakers are doing to capture another year of double-digit profits. She speaks with NPR Business Reporter Sonari Glinton and Michelle Krebs of Edmonds.com, a car industry tracking site.

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MICHEL MARTIN, HOST:

I'm Michel Martin, and this is TELL ME MORE from NPR News.

New Hampshire voters are taking part in the nation's first primary today. So, we decided to check in with conservative activist and author Phyllis Schlafly. We decided to ask her who she would like to see as the eventual GOP nominee or at least the consensus candidate for conservatives. We will have that conversation in a few minutes.

But first, we're going to shift gears and talk about the Detroit auto show. The annual event, it's actually called the North American International Auto Show, kicked off in the Motor City yesterday. The show goes on for the next two weeks and opens to the public on Saturday after years of smaller and more understated conventions. This year's auto show has revved up the glitz again and there are signs that the period of sluggish sales in the industry may be in the rearview mirror.

We decided to call upon two people who were lucky enough to get a preview. Michelle Krebs is a senior analyst at Edmunds.com, which tracks trends in the auto business. Also with us is NPR's business reporter Sonari Glinton. He covers both the industry and other economic issues for the network. Welcome to you both. Happy New Year to you both.

MICHELLE KREBS: Happy New Year to you, Michel.

SONARI GLINTON, BYLINE: Happy New Year.

MARTIN: And we do want to mention that we planned this segment some time ago before we knew about this, but we feel it's appropriate now to disclose that NPR has just announced a new joint effort with the Ford Motor Company to make the network's programming available through Ford's Internet-connected cars. As we said, we planned this segment some time ago, but we feel people should know about this.

So, before we get started, Michelle, virtually every report coming out of this auto show talks about how, you know, the glamour is back. The glitz is back, big is back. What are they talking about?

KREBS: Well, everybody's in a great mood because we're coming off a fabulous year of sales, relatively speaking. And we anticipate that this year will be better and next year even better. So, we're seeing more glitz, more glamour, but still a lot of bread and butter at the show as well.

MARTIN: Well, give me an example. We're not lucky enough to go yet. They're not letting, you know, the (unintelligible) like us in yet. So, what are they doing that's different this year that you hadn't seen in the last couple of years?

KREBS: Well, I didn't - I think it's more of the mood. And we're also seeing new exhibits. Lincoln, for example, on the Ford part of the show, has a brand new very glitzy exhibit. It's got these lights that kind of fold down and then balloon open. And then - I think Sonari took a ride on this mechanism that goes up into the clouds.

GLINTON: Yes. Ford has a - it wants to intimate what it's like to be in the cloud. So, it has - it's like an amusement park ride which takes you into the cloud. Now, when you think about how much they spend on these, like, just the, you know, without, you know, hydraulic lifts, they're about, you know, eight to ten million dollars for one of these displays. So, you can kind of imagine what the Ford display must cost.

MARTIN: Sweet. So, Sonari, the Detroit area carmakers, the so-called big three - Ford, General Motors and Chrysler - each, as Michelle pointed out, recorded double digit sales growth in 2011. They combined for almost 13 million vehicle sales last year, which is the best since 2008. What's underlying that? Do we know what's driving that?

GLINTON: You know, there are a lot of factors. One of the things is that people, because of the recession and the downturn in economy, they didn't buy cars and they've been waiting and waiting. And so, they're like, oh, Betsy. We got to replace Betsy. So, well, you know, they're holding out. And when people are buying, they're buying cars because they genuinely need them.

The other thing is in terms of the U.S. carmakers is we can't underestimate how big and important the Japanese earthquake and tsunami has been on sales. You know, just heard that Honda was saying that they didn't even build 500,000 cars. So, there's a lot of room for growth when one of the most important places in the industry was so hurt.

MARTIN: But, Sonari, to that end, though, are the automakers offering anything to entice people to replace Betsy, as you put it? What are they showing that they're hoping will get people excited about making that final leap into the showroom?

GLINTON: Well, you know, one of the things that I found interesting is that someone said to me it's the return of the passenger sedan for the American automakers. So, Ford, you know, has it's Ford Fusion which is it's, you know, it's now in the top five selling automobiles or cars rather I should say. And they completely refreshed it. It looks like a...

KREBS: An Aston Martin.

GLINTON: Yeah. Yeah, exactly. It looks like an Aston Martin. It has that European styling. There have been, you know, Ford is being really aggressive. There is the Dodge Dart, which is a small car.

KREBS: Based on an Alfa Romeo from Europe. So, there's an influence there.

(SOUNDBITE OF LAUGHTER)

GLINTON: Yeah, exactly. I mean, there's a lot of European influences on the American automakers.

MARTIN: But, Michelle, is there anything else to unpack behind these numbers? You know, in retailing, for example, there was some strong sales, you know, right after Thanksgiving, but then sales slowed down. And there was also a lot of steep discounting going into Christmas. So, that's like - we're just talking on, you know, the retail side not cars. So, is there anything else you want to unpack with those numbers? Or is it just exactly as it seems: Growth after having been sluggish for - sales having been sluggish for a number of years are finally back again?

KREBS: Well, I think it's - the economy's improving a little bit. The other thing we can't forget is you can now get a car loan when you couldn't during the recession. Credit availability has been a huge factor. And the whole pent up demand of people letting their cars get so old. The average car on American roads today is almost 11 years old. I think I heard Ford cite a number of one of every five is between 11 and 15 years old. That's the oldest we've ever seen.

And the other thing is when you didn't have big new car sales, that means there's not a used car market and Cash for Clunkers a few years ago took those out. So, used cars are not really an option. So, people are turning to new cars. And there's great choices in the new car market.

MARTIN: We're talking about this year's Detroit auto show. It's the big one. Our guests are Michelle Krebs of the auto industry journal Edmunds.com. That's who was speaking just now. Also with us, NPR business reporter Sonari Glinton.

So, Michelle, of the three major carmakers, the big three, Chrysler and GM received billions of dollars in bailout funds beginning in 2008. It's still controversial even though I think that those - that money's largely paid back. How do you - how is that effort now being assessed by the industry? Is it viewed as a success? Is it viewed as - how is it viewed?

KREBS: Well, yes, it is controversial. And there were members of Congress who will still argue against it, but it saved thousands of jobs. We are seeing jobs being added to the economy. Chrysler just announced another thousand jobs here in Detroit to build more vehicles. And we're going to see that over the next year or so, because factories were closed and now sales are good. So, we're going to see the big three - GM and Chrysler and Ford - all add more jobs, more factory capacity as they add more new products.

So, you know, it's successful. And in a few weeks, we'll see earnings reported. So, they will be strong. We're going to see Chrysler in a far better position than we had.

MARTIN: And the other thing we're going to see in a few weeks is the Super Bowl ads, which are always attention getting. Sonari, remember the one last year that debuted starring hip-hop star Eminem who of course is from Detroit. And he's not, you know, I have to play it again, of course, because it was the one. The name of the spot was Imported From Detroit. Here it is.

(SOUNDBITE OF TV COMMERCIAL)

KEVIN YON: What does this city know about luxury, huh? What is a town that's been to hell and back know about the fine things in life? Well, I'll tell you, more than most. You see, it's the hottest fires that make the heart of steel. That hard work, conviction, and the know-how that runs generations deep in every last one of us. That's who we are and that's our story.

MARTIN: OK, I think we get it.

(SOUNDBITE OF LAUGHTER)

MARTIN: But all right, Sonari, didn't the bailouts do anything to help Detroit?

GLINTON: Well, of course, the health of the car industry is deeply tied with the health of Detroit. However, I mean, someone put it to me that you don't throw a party because your house didn't burn down. I mean, that's how - Detroit has some deep systemic problems that have nothing to do with the auto industry and it's like, if the auto industry had gone south, you know, you get the feeling that it would have been so devastating to the city.

But, you know, staying, you know, at level, you know, being relatively healthy doesn't mean that Detroit, the city, is healthy.

MARTIN: Is there a sense of improvement in the mood there at all, Sonari, that given that Michelle was telling us that the mood at the show is better than it has been in years? What about the mood in Detroit, at large?

GLINTON: You know, I don't see - you know, every time there's something good that happens in Detroit, people say, well, you know - oh, the Lions were doing well, so that must mean - or I think Detroiters are resigned and not, you know - they're resigned to what's going on. They're sort of like, oh, we've seen what's bad that's happened. We're sort of tired of people talking about this narrative of the city. Let's go about making our city better.

I mean, that is the sense. I mean, when you're a reporter and you walk up to someone with a microphone in Detroit, they look at you and like, oh, goodness, are you going to tell that? What are you trying to get me (unintelligible)?

MARTIN: Enough with the mood check. Let me just...

GLINTON: Yeah, exactly. Yeah.

MARTIN: ...go and live my life. I see.

GLINTON: Yeah. We're a city. We're going to get through it. You know, the city's been around for hundreds of years. It's going to be around for hundreds more.

MARTIN: All right. Well, finally, Michelle, let's look ahead again at imports. A final thought from you, if we can. I understand that Nissan is back at the show, that the Japanese carmaker had been a no show for the last three years. What else can you tell us in the minute that we have left about - are there other overseas companies that are making a strong showing? Is there any interesting news on that score?

KREBS: Well, absolutely. We're seeing a big display by the Germans because BMW and Mercedes have been slugging it out for luxury car leadership and BMW got it this year. It's going to be an interesting race this year. The other big think, I think, at the show is Honda, which got hurt so badly from the earthquake and Toyota to a lesser degree. Honda's back here big time. They are showing all kinds of new vehicles and I think they are sending the message that we are back and we are back big.

MARTIN: Anything exciting to tell us about? And please don't talk about the minivans because I...

KREBS: No. At Honda, the Acura NSX is the real head turner. That's a concept sport car that, you know, has always been popular and now it's going to come within a couple years with hybrid. And then there's another sports car from Lexus, too, that's very sexy.

MARTIN: All right. Well, do take a ride for us. Please, take a spin in it for us. OK? Michelle Krebs is a senior analyst at Edmonds.com, which tracks trends in the auto industry. And Sonari Glinton is NPR's business reporter who covers cars and the economy for the network. And they were both kind enough to join us from member station WDET in Detroit.

Thank you both so much.

KREBS: Thank you.

GLINTON: Very good to be here.

(SOUNDBITE OF MUSIC)

MARTIN: Just ahead, as the GOP candidates square off in New Hampshire's first in the nation primary today, we decided to hear from conservative icon, Phyllis Schlafly about she and other conservatives say they are looking for in a candidate and why it's been so hard for them to find the right one.

PHYLLIS SCHLAFLY: We want somebody who is a leader, who will be right on the issues, and who will lead us out of this trend that Obama's taking us on, which is really, as he said, a fundamental transformation of the United States.

MARTIN: That conversation is just ahead on TELL ME MORE from NPR News. I'm Michel Martin.

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