For the 25th time, Detroit is playing host to to the North American International Auto Show (sometimes referred to as the Detroit Auto Show). The event runs from Janurary 14th-27th and features the unveiling of many of the years’ newest models and technologies. Unfortunately following the Great Recession, many of the Shows lacked enthusiasm and optimism in comparison to pre-Recession levels. Thankfully, the recent successes of the post-Bailout auto industry have led to a much more upbeat event than in years past. Some highlights from the first few days of the Show include the unveiling of the new Corvette Stingray, the new Ford Atlas and Transit concepts, the new Bentley GT Speed Convertible (a personal favorite), the new Hyundai Genesis concept, and the new Lincoln MKC Crossover concept.
Although the unveiling of new models excites both car buyers and sellers, Denso’s announcement at the Show should excite all Amercians (seen here: http://www.battlecreekenquirer.com/article/20130115/NEWS01/301150005/Denso-invest-750-million-U-S-over-next-four-years). Denso’s $750 million investment not only will create jobs and help improve the macroeconomy, but the added investment also points towards growing confidence in the growth of the American auto industry. Given the importance of durable goods markets (like the housing market) in the recent recession, investments like these will hopefully continue.
If you are into cars at all, I would highly recommend following the WSJ’s or NYT’s coverage of the Show.
5 Comments
So … is this a sign of a better macro environment or a reflection of an aging “parque” (vehicle fleet) forcing people to buy?
We are seeing investment by Japanese firms. Is this however a reflection of the strength of the US economy or the yen-dollar exchange rate? Of course there are also changes in technology leading to investment by suppliers instead of OEMs, so what we really ought to do is try to measure aggregate automotive investment (well, not dealership inventories!!) and not that of publicly traded firms with their endless stream of news releases.
Note that it’s a strange use of English to call the bankruptcy of GM and Chrysler a “bailout”. Be careful not to unthinkingly accept buzzwords that violate common sense; don’t let ideologues of any stripe get you with propoganda!
I am less ecstatic about the Denso’s investment, not because of the content and the much needed boost to Michigan’s economy, but because of the positive and hopeful reactions this news creates. I am concerned that this renewed interest in maintaining the auto industry will reconstruct the homogeneity that is Michigan’s economy. It may take the focus off diversifying, which may be the state’s only hope for long-term sustainability and avoid another disaster that pretty much destroyed the state in the 2000s.
Do you believe it to be necessary (given a potential carbon/gas tax) that American auto-makers make energy efficiency the focal point of the $750 million? Or will the business plan be more traditional?
Automakers face 4 mandates which are often in tension: increased fuel economy, increased safety, lower emissions and better options and NVH (noise vibration handling). The easiest way to reduce fuel economy is to lower weight. Emissions controls typically add weight and directly affect power. The easiest way to improve safety is to add weight (even if indirectly via airbags and stability control and the like rather than directly through better crush zones), ditto noise and vibration and (much of the time) options. For example, wiring is heavy…and fancier electronics not only adds the chips and displays (the latter often already present) but lots and lots of wiring. The simplest way to reduce noise is with lots of sound-deadening materials, and the heavier the more it absorbs. So … how to balance remains a challenge.
I think it is interesting how something like the automobile sector sales can tell us something about the economy based on people’s enthusiasm and willingness to invest in luxury goods, such as nice cars. Obama has recently announced he would propose a new rule limiting the harmful emissions from cars. When this goes into affect it would only slightly increase the purchase price of each car, but would drastically reduce the negative externalities associated with pollution and harmful emissions. I am curious as to whether the automobile industry currently has the technology to make these changes and what the possible negative effects of this new rule could be. Here is a link:
http://www.huffingtonpost.com/2013/03/28/tailpipe-pollution-rule-epa_n_2976057.html
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