Showtime at the Cobo

As the Detroit Auto Show opened to the media on Sunday, America's two biggest and most beleaguered automakers, General Motors and Ford, tried desperately to change the subject from their banged up finances. There were dazzling new promotional displays for each, with immense video walls so frenetic you could get car sick just watching them. There were outrageous concept cars, like the over-the-top Ford Super Chief $100,000 pickup chronicled in this week's Drive Time preview.

There was also much executive talk about how well the two companies are doing outside of the United States. (GM is now No. 1 in China, don't you know?) GM even resorted to the old school Motown trick of parading out statuesque models (of the feminine, rather than automotive variety) in gowns so sheer you could see their black undergarments. While that display was enough to give me a serious case of whiplash, it wasn't enough to distract from GM and Ford's combined $6.2 billion in losses in the North American car business in just the first nine months of last year.

Still, Ford Chairman and CEO Bill Ford and GM Vice Chairman Bob Lutz tried gamely to re-educate the 6,000 or so journalists jammed into Detroit's Cobo Hall for this annual automotive fashion show. "We've had a lot of bad press and frankly that doesn't help too much in the showroom," Lutz said to a shoving scrum of reporters just after a half dozen metallically dressed beauties unveiled the curvaceous Buick Enclave to angelic music that conjured the second coming. "When the news is bad, everyone in the media has to outdo themselves in negativity. My hope is that some brave journalist gets to know us and starts to swim against the tide." The currents are shifting, Lutz argues, because of GM's new crop of big, but fuel-efficient SUVs and stylish crossovers like the Enclave that combine a car's smooth ride with an SUV's commodious space. (I counted four video screens in the Enclave, the most I've seen in a car. There was even one in the front passenger sun visor.)

Ford: Crossing Back into the U.S.? Over at Ford's impressive new indigo oval-themed stand, Bill Ford held court to point out that his company, unlike GM, did end the year in the black overall, despite its hemorrhaging U.S. car business. But Ford's U.S. collapse has been breathtaking. Over the last decade, Ford has gone from controlling one-quarter of the U.S. auto market to now accounting for just over 17 percent. Last year sales of its once mighty SUVs plunged as gas prices soared. "There's no way we could have anticipated the kind of spike we saw in gas prices," Ford said. "The world we're operating in is changing and it will require more fuel-efficient vehicles and maybe smaller vehicles." That's why Ford plans on selling a quarter-million hybrids by the end of the decade, up from the 20,000 Escape hybrid SUVs now. But Ford's turnaround will take more than hybrids. It will ride on cars like the Ford Edge crossover introduced Sunday, with the same in-your-face look as Ford's Fusion family sedan, one of its few hot sellers.

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Despite the brave face each company put on, Ford and GM can't predict a rip-roaring recovery this year. In fact, they are bracing for worse overall U.S. car sales in 2006. And they admit there is more bad news coming. On Jan. 23, Ford will announce something it cheerfully calls "The Way Forward," but is actually a new round of factory closings and layoffs to shrink the company to reflect its diminished place in the American car market. "It's going to be painful for some people," admits Ford. "We've got to fix our North American car and truck business."

Toyota: Living Large, Living LuxeFor a more optimistic take on the car business, I wandered over to Toyota's introduction of its sleek new Lexus LS--the top selling prestige luxury car of 15 of the last 17 years. Without a single showgirl, Toyota President Jim Press (in a pinstriped suit) unveiled the plush $60,000-plus sedan from beneath a dome of crystal champagne glasses. Despite the pomp and seriousness of the presentation, Press brought down the house with earthy wisecracks about the big Lexus' whiz-bang new technology. Take the climate control system, which measures both the car's and your body's temperature. "I've been afraid to ask where that sensor goes," Press deadpanned.

Besides laughs, Press drew gasps as he told of the LS' 8-speed transmission, the first car ever to have so many gears. "That's right, 8 speeds," he boasted, "we're upping them by one." (Mercedes-Benz has bragged recently about forthcoming 7-speed transmissions.) The LS also has a 19-speaker audio system with an iPod-like hard drive that can hold 4,000 songs and rear seats with leg massage and ottomans like a private jet. "There's no reason ever to get out of the back seat," Press said, "you could live there."

And for the well-off who are worried about gas prices, a hybrid version of the LS is also coming later this year. With new products like that (and more profits that any other car company), it's no wonder that Press has such a rosy outlook. He expects Toyota's sales to grow up to 10 percent this year in a U.S. car market that Toyota believes will rise by 300,000 cars--a marked contrast to Detroit's dour predictions. "Other companies might have to adjust a little bit," Press said. "But we're trying to expand." And so far, they're succeeding wildly.

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Chrysler: No Desperate Housewife Another car company feeling light on its wheels is Chrysler, Motown's only profitable company. Chrysler execs played to a packed house Sunday with the introduction of their Dodge Challenger muscle car and opulent Chrysler Imperial--a Bentley-inspired limo that is essentially the ultimate pimped-out version of the Chrysler 300C. Rolling up big in the Imperial was Chrysler's new CEO Tom La Sorda, accompanied by prime-time siren Eva Longoria of ABC's Desperate Housewives. But Eva appeared to go off-script when La Sorda emerged from the Imperial and bragged: "Look who've I've got for a date." Eva snapped back: "Tom, I'm not that desperate." After some nervous tittering, Longoria got back on message by saying: "I mean, I'm desperate for these cars." She then looked at La Sorda and said sheepishly: "Sorry."

GM: Free Trade Flame Off As if bankruptcy rumors and billion-dollar losses weren't bad enough, GM CEO Rick Wagoner now knows what journalists feel like when they write something people don't like. Last month, Wagoner wrote a guest column in The Wall Street Journal that called on Washington to help bail out America's No. 1 automaker by providing some relief for runaway health care costs and taking a tougher line on trade with Japan. In Wagoner's view, Japanese automakers get a huge cost advantage over Detroit because the Japanese government manipulates the yen to make Japanese cars cheaper in America. Wagoner's arguments weren't well received by the free-trade hawks who read the Journal. Their letters to the editor flamed Wagoner--and Detroit--for just not getting it.

"When you're losing a lot of money, if you say anything other than: We're the dumbest guys in the world, somebody is going to say: You're in denial," a feisty and combative Wagoner said in a pre-auto show interview Friday with a small group of journalists. But Wagoner was not backing down from his controversial column. "Hey, I believe in free trade. I went to Harvard business school and it was drilled into my head," he says. "But just to ignore the systematic intervention in the currency for 20 years, that doesn't sound very smart to me. And it doesn't sound very fair. And it doesn't sound very free. So because you raise that, does that mean you don't believe in free trade? No. It means you don't believe in stupid trade."

So what will it take to convince Americans that Detroit is smart? That's simple, says Wagoner: Deliver the goods. "You can't wear a hair shirt over this thing," he says. "The right thing to do is get going. Get the right products; get people saying good things about your products. Drive revenue and make some money. It's not hard." Well, it's kinda hard. Wagoner still won't say whether GM will make money this year.

Showtime at the Cobo | News