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Detroit Auto Show Opens in Gloom

Falling sales and a slumping economy overshadow the annual show, but German companies strike an optimistic note.


Honda's new SUV makes its debut at the International Auto Show in Detroit

The International Auto Show in Detroit opened over the weekend under a black cloud.

Experts have forecast that the sales market this year will come nowhere near the highs reached in 2000 and 2001 and speculation intensified the prospects that Ford, one of Detroit’s big three auto-producers, would have to cut jobs and close plants to overcome its worst financial crisis in a decade.

"There’s no doubt about it," said Ford spokesman Jim Bright. "The coming news dows unfortunately cast a shadow over anything here."

But Bright wasn’t speaking for German car companies, who enjoyed record exports last year and announced plans to increase their market share even further.

Volkswagen to expand US market

Volkswagen’s chairman Bernd Pischetsrieder said on Sunday that the Wolfsburg company sold 5.08 million cars last year, a slight increase from 2001. The company had bigger plans for 2002, seeking to increase its share of the US market despite an negative economic prognosis.

"Our goal is to increase our stake in the US market in 2002, and we are going to reach that goal," he said.

Volkswagen’s daughter company, Audi, also gave notice it planned to grow in 2002, following record gains in exports last year. The 725,000 cars exported mark an 11 per cent increase over 2001 numbers.

"We also want to grow in the coming year, despite a sinking market," company chairman Georg Flandorfer said.

DaimlerChrysler wants to overcome losses

DaimlerChrysler was less optimistic. Chrysler President Dieter Zetsche told reporters on Sunday that the company expects a loss of at least $2 billion this year He warned that U.S. market conditions --including an expected drop in sales and continuing high levels of expensive customer incentives -- would not allow him to guarantee that the DaimlerChrysler would reach its break-even goal this year.

Zetsche nevertheless struck a positive note.

"I and, more importantly, my entire team are not concerned," Zetsche said. "We knew that there are a lot of challenges. But we also know that we learned in 2001 how to deal with those problems. That’s why we’re confident that we can overcome those problems again this year."

One of the cars Daimlerchrylser hopes will help it is the Pacifica, a hybrid station wagon-sport utility vehicle. Chrysler executives said the company plans to build at least 130,000 Pacificas annually after it goes on sale next year. The company believes the Pacifica could be as successful as the PT cruiser, the 1930s gangster-style car that created a buzz and huge sales later when it was introduced at the Detroit show three years ago.

Retro-trend continues

Chevrolet and Ford continued the retro trend this year, with designs harkening back to the 1950s and 1960s.

Chevrolet has resurrected the Bel-Air, a 1950s darling, as inspiration for a two-door convertible concept car. Ford unveiled an update of the Ford GT40 supercar that won the Le Mans endurance race in the 1960s.

But the bad news overshadowed the company’s unveiling. A spokesman would not comment on the potential restructuring Ford will take to overcome billion dollar losses and layoffs.

"Right now we are in the middle of a painful but necessary transformation of our company," Ford Chief Executive William Clay Ford Jr. told a crowd of employees and journalists on Sunday. "We’ve made some progress already but we’re not finished. We will be making more announcements later this week."

The US auto market is expected to slip this year after reaching near-record highs in 2001 when the industry offered interest-free loans and other incentives to encourage consumer confidence and demand following the September 11 attacks. But the market is expected to slip from the 17.1 million cars sold in 2001 to between 15 and 16 million in 2002.

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