DETROIT,
Jan 7 (Reuters) – The hard-pressed U.S car industry slipped into a familiar gear
on Sunday, cranking out the hoopla and the hyperbole to launch new products at
pre-Detroit car show shindigs.

DaimlerChrysler AG’s struggling Chrysler unit drove a new Jeep sport utility
vehicle – Liberty – onto the worldwide automotive stage, both literally and
figuratively, at the start of press previews for the annual car show.

Ford unveiled a new 3.9 litre V8 coupe concept car – the 49 – with the help
of 50 gospel singers, a speech from company chief executive office Jacques Nasser,
and thousands of Ford employees bussed in to cheer at the appropriate moments.

Not to be outdone, General Motors shook the dust covers off five concept vehicles.
These included the Buick Bengal roadster and the Cadillac Vizon.

None of this razzmatazz can hide the fact that the automotive industry in the
United States is in big trouble.

U.S. sales of cars and light vehicles were a record of about 17.4 million in
2000, up from the previous record of 16.9 million in 1999. But sales in the
United States started to show alarming weakness in 2000’s fourth quarter. Analysts
are now scrambling to slash their forecasts for 2001 and beyond.

Britain’s automotive intelligence provider Autopolis, in a report published
last week, said annual U.S. car and light vehicle sales could dive by up to
20 percent, or 3.5 million vehicles, over the next three years.

And the record sales pace in the 1990s has hidden a dangerous development for
domestic U.S. car and light truck makers.

Volkswagen.gif” width=”99″ height=”101″> BMW.jpg” width=”80″ height=”73″>
German
luxury car maker BMW and mass manufacturer Volkswagen AG have scored big
gains in sales

FOREIGN ASSAULT

The big three of GM, Ford and Chrysler lost U.S. market share in 2000, but
foreign car makers like German luxury car maker BMW and mass manufacturer Volkswagen
AG have scored big gains in sales.

Asian makers like Korea’s Hyundai, Daewoo, and Japan’s Mitsubishi, Suzuki,
Honda and Toyota all performed in a different league to domestic producers.

According to research firm Autodata Corp, the big three’s share of the U.S.
auto market slipped to 65.6 percent in 2000 from 68.5 percent the previous year.
Not only are the foreign invaders taking an increasing share of markets where
they have always been strong – small cars, luxury and near luxury sectors –
but now they are invading sectors like sport utility vehicles, multipurpose
vehicles and pickup trucks.

The U.S manufacturers have traditionally made fat profits from these vehicles
and this trend has set off alarm bells in the industry.

UNDER SIEGE

The Detroit News published a special supplement on Sunday with the headline
"Under Siege," arguing that the American car industry is under assault
from Asian and European car makers, and there is an increasing risk of more
plant closures and layoffs.

GM announced plans Thursday to idle eight plants in North America for next
week and additional plants through the rest of January. The Chrysler unit is
also contemplating white-collar layoffs. It has already curtailed output at
its North American plants to rein in bloated vehicle inventories. Ford and GM
have slashed vehicle production levels for the first quarter and officials with
both automakers said they expected to cut their production forecasts further.

Chrysler hopes that its new Liberty can help reverse this trend and boost Jeep
sales worldwide. More importantly, it should help Chrysler, which expects to
lose about $US1.25 billion in 2000’s fourth quarter, regain its financial footing.

"If there’s one message I want to convey, it is this, exciting breakthrough
products made this company and those kind of products will make our company
stand tall again," Chrysler’s new chief executive Dieter Zetsche told hundreds
of reporters.

"This new Jeep Liberty is evidence of exactly what I’m talking about,"
he added. Chrysler officials said they expect to sell 215,000 of the new SUV,
which it spent $1.7 billion developing, in 2002, its first full year. It goes
on sale this summer and will be built in Toledo, Ohio.

J.D. Power and Associates analyst Thad Malesh thinks Liberty will do well,
competing against such SUVs as Ford’s Escape and Toyota’s RAV4, more car-like
SUVs that are smaller than the popular mid-sized models like the top-selling
Ford Explorer.

Liberty ostensibly replaces the aging Jeep Cherokee, which will be phased out
by the middle of the year, much earlier than Chrysler had said earlier. The
automaker touted its four-Jeep line-up when it announced the Liberty name in
November, and had previously said Cherokee could be built until the end of 2002.

The North American International Auto Show in Detroit is open to the public
January 13-21.