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Slowdown takes the shine off auto shows

GM scraps debuts at L.A. expo as the industry cuts expenses.

November 12, 2008|Ken Bensinger | Bensinger is a Times staff writer.

Facing their worst sales in decades, carmakers are cutting spending on auto shows, the industry's traditional customer-courtship event.

General Motors Corp. has scrapped plans to debut its Buick LaCrosse and the Cadillac CTS Coupe at the Los Angeles Auto Show next week, and said Tuesday that it was canceling its only news conference planned for the event. Chrysler said it would make local dealers pay for the company's exhibition stand at the show and would reveal no new products.

Four other car companies -- Ferrari, Rolls-Royce, Land Rover and Suzuki Motor Corp. -- are withdrawing from the nation's premier auto show, held in Detroit in January.

Those and other auto show cutbacks come as GM, Chrysler and Ford Motor Co. lobby for billions of dollars in federal aid. GM and Ford lost a combined $30 billion in the first nine months of the year, and GM said last week that it could run out of cash in the first half of 2009. Privately held Chrysler does not release financial results but is widely thought to be in dire financial straits.

Through October, overall U.S. auto sales are down nearly 15% compared with last year, and just one major automaker, Subaru, has sold more cars in the U.S. this year than last.

In response, Detroit's automakers have cut production and shed thousands of jobs; GM announced 5,500 layoffs last week. And all auto companies, including leading import brands, say they have been reducing other spending.

That, increasingly, is affecting auto shows. Nationwide, four shows -- Los Angeles, Detroit, Chicago and New York -- are the largest and most important. Drawing battalions of reporters to their new models and concept cars, they build buzz and then throw open their doors to hundreds of thousands of potential buyers.

"Clearly, we're affected," said Andy Fuzesi, general manager and co-owner of the L.A. Auto Show, which has nearly 20% fewer exhibitors at this year's show compared with last year, when nearly 100 companies paid to show their wares to more than 1 million visitors at the Los Angeles Convention Center. "Everybody is clearly reassessing where they spend their money."

GM's last-minute pullout left Fuzesi with a hole in his schedule and cast a pall on the show. Bob Lutz, GM's legendary vice chairman, was supposed to lead the news conference but will stay home in suburban Detroit, leaving show-goers with only a hybrid concept car that already debuted in Paris. Chrysler's near-invisible presence at the show guarantees that two of the four biggest exhibitors will make little noise. That, Fuzesi said, could discourage people from paying $10 for tickets to the show when it opens Nov. 21.

Of course, not all automakers are pulling back. Ford is introducing six vehicles at the L.A. show, including two hybrids, and is throwing a huge party for the debut of its much-anticipated 2010 Mustang redesign.

"We have no plans to cut back on our show activity," Ford spokesman Jay Ward said.

The nation's second-largest automaker is planning to debut as many as five other vehicles at the Detroit show in January, according to a source at the company who spoke on condition of anonymity because he was not authorized to discuss such details.

But for many other car companies, shows have quickly become an unaffordable luxury.

For Suzuki, which sold 100,000 cars in the U.S. last year, spending money on the Detroit show no longer makes sense. Suzuki's sales here are down 12% so far this year, and with no new models or concept cars to introduce, the company decided to give up on the Detroit confab.

Instead, the company is holding a small dinner for reporters before the show, avoiding the expense of transporting dozens of vehicles across the country, which can cost $10,000 a car. It is also saving the cost of renting floor space, sets and lighting, and employing a large staff at its booth.

"It's a purely economic decision," said Suzuki spokesman Jeff Holland, adding that "this is no reflection on the people of Detroit or on the city."

Similar logic was applied by Ferrari, the Italian carmaker owned by Fiat. Although it is unveiling a new vehicle at the L.A. show, the 193-mph California, it has nothing new to exhibit in Detroit. So it canceled on the 101-year-old event, as did Land Rover, a unit of Indian carmaker Tata Motors, and Rolls-Royce, which is owned by BMW. (BMW will be in Detroit, however.)

"We are cutting back," said Paul Ferraiolo, president of Rolls-Royce North America, which puts a $407,000 price tag on its Drophead Coupe. "Motor shows are expensive."

As are the events surrounding them. In August, GM canceled GM Style, its huge kickoff party for the media at the Detroit show; on Tuesday, a Chrysler spokesman said the company was weighing whether to cut back on its legendary Detroit Firehouse Party.

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