Blog: 2015 Detroit Show's sunny backdrop
Dave Leggett | 13 January 2015
Is this, potentially, a "gamechanger"? General Motors CEO Mary Barra and North America President Alan Batey with the Chevrolet Bolt EV concept vehicle at the Detroit Show yesterday
It's very cold this week in Detroit, but the weather for North America's auto industry is set pretty fair - for now.
The price of oil has now slumped to under $50 a barrel and it looks like the Saudis are determined to keep on pumping in the hope that they can take out the more marginal suppliers who require a higher price. The latest forecasts suggest that the price of oil will stay pretty low this year and next.
It's an interesting backdrop to the Detroit Show (NAIAS), which has opened to the press today. The US market has been pretty strong over the past 18 months, with larger vehicles back in vogue on cheaper pump prices. There is, however, a new Chevrolet Volt range extender on show with its electric-only range of 50 miles, a 20% improvement on the current model.
Also from Chevrolet, there's an intriguing EV concept that was shown in Detroit yesterday - called the Bolt - that it is claimed will have a 200-mile range. That kind of range starts to do away with range anxiety. Of course, much still depends on packaging and pricing for any such vehicle that eventually makes it to market. There is a long way to go for electric vehicles to get to a critical mass of volume that really brings unit costs down. And from a demand point of view, the low oil price won't be helping electrics.
In North America, the auto business is in a pretty good place right now. Profits are still high and the market - at 16.5m units last year - is back to where it should be. The US economy is looking relatively good, prospects for employment creation very positive, as Mary Barra has pointed out. However, there seems to be a consensus that the market will flatten out now and that some of the drivers of recent years – such as pent-up demand following an unprecedented market plummet – are easing. A period of significantly softer demand in North America would be a test for the Big 3. Would they be able to avoid repeating some of the mistakes of the past, such as resorting to bottom line bashing incentives? That may well be a question on minds this time next year, but for now it's probably best to enjoy the North American auto industry's particularly fair weather and the cheap gasoline at the pumps. Neither will last forever.
I'm starting to get a small idea of the scale of things here in China, but really, I'm only scratching the surface of this vast country....