Carmakers gather for last winter in Detroit as auto show switches to June
The icy winds whistling off the Great Lakes will take temperatures to well below freezing in Detroit this week. Not that the cold will deter hundreds of thousands of visitors from pouring into Motor City for the North American International Auto Show, arguably the world’s most famous car show, when it opens on Monday.
This will be the last year that warmly wrapped gear heads will face an icy dash between the show and the city’s sold-out hotels and restaurants to discuss this year’s models and parties. Next year NAIAS – which can trace its history back to 1899 – moves to the balmy month of June. The plan is to show the resurgent city at its best and allow manufacturers to demonstrate their new cars – and technology – outside in the fresh air.
It may seem like an obvious move but some fear the shift could kill an event that pumped $480m into the region last year, filling hotels and restaurants with car fans, corporate accounts and journalists in the post-holiday lull and giving the still-troubled city a much-needed boost. This year that boost comes as Detroit’s largest industry appears to be heading for trouble again.
Locals are worried. “We’ll survive but I guarantee you others won’t,” said Timothy Tharp, board chair of the Detroit Restaurant Association and coowner of several downtown restaurants including the historic Grand Trunk Pub, a lively spot housed in the former ticket office of the Grand Trunk Railway.
June is already a big month for downtown Detroit, he said. “Januarys are traditionally a very slow month for restaurants but thanks to the show they have been great for us,” he said. Until now.
Grand Trunk is a five-minute walk from the giant Cobo Center convention hall where NAIAS takes place. “We have so many international visitors, people speaking Japanese, German, French,” said Tharp. “Are they going to come in summer?” He’s not convinced. The impact on staff, who are likely to have hours cut “will be enormous,” he said.
But car shows, and not just Detroit’s, have issues. The industry has changed – unveiling new technology is now just – if not more – important than launching new models. Over in always sunny Las Vegas the Consumer Electronics Show, which overlaps with NAIAS, has stolen many of the headlines in car news in recent years. Even hometown giants Ford and General Motors have used CES to show off their tech chops.
Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said his family used to make an annual trip to the Detroit show when he was a child. “It was exciting. There were exotic cars you would never see otherwise,” he said. “Now I’ll go but not with any great excitement. I asked my neighbors recently if they’d go and they kinda shrugged.”
Gordon said Detroit would probably remain the epicenter of US car manufacturing but the buzz had moved on. Moving the show was unlikely to change that.
And after bouncing back from nearcollapse automakers are also re-evaluating how much money they spend at auto shows. Major European carmakers including Audi, Land Rover, Mercedes Benz and Mini have all dropped out of Detroit this year, making the International “I” in NAIAS superfluous.
It’s easy to see why the car companies are cutting back. Some $127bn (£100bn) was wiped off the value of car companies last year. Sales held up in the US but few are expecting that trend to hold in 2019 or 2020.
Last November GM announced it was shedding 14,700 jobs and closing plants as it deals with slowing sales of sedans. Interest rates are rising in the US and new car sales are expected to decline. The price of a new car hit a record $35,957 in December, about 2% higher than the previous year. according to Edmunds.com.
And then there is Donald Trump. His ongoing trade wars, with China in particular, have rattled auto executives and their shareholders and steel tariffs have increased manufacturers’ costs. They have also contributed to a slowdown in China, the world’s largest car market. Chinese car sales just experienced their first slowdown in more than 20 years.
“It’s going to be a pretty quiet show this year,” said Michelle Krebs, executive analyst for Auto Trader. “Everybody is pulling in the reins on spending.”
One quiet year doesn’t spell doom. Car sales are cyclical and Detroit has faced down bigger worries. But shifting the car show is still a big gamble.
Last year it attracted more than 800,000 visitors and the money it pumped into the local economy is equivalent to holding two Super Bowls. But the risk of not moving the show outweighs the risk of leaving it alone, said Sandy Baruah, chief executive officer of the Detroit Regional Chamber.
Baruah, a car fan who has been attending the show for over a decade, said the show had to change or die.”
Car shows used to be about “showing off sheet metal”, he said. “The new design, the new interiors. Now it’s not just about those things it’s about the technology in your vehicle and what it’s going to do for you.”
The classic car show display with a car on a pedestal revolving slowly under bright lights accompanied by a statuesque model (usually female and underdressed for a Detroit winter) just doesn’t cut it these days.
Instead he expects to see a lot more hands-on demonstrations of all the new self-driving tech that the car companies are developing. It is certainly something the industry needs.
Public polling shows most drivers don’t currently trust autonomous cars. According to a survey conducted by the insurer AAA, 73% of American drivers report they would be too afraid to ride in a fully self-driving vehicle. That’s a problem for an industry currently spending billions on robot vehicles.
“That number changes 180 degrees when you put people in a vehicle to experience it,” said Baruah.
An outdoor car show will allow Detroit to demonstrate the future of driving in a way that the cold-bound indoor event never could, he said. “It’s a fantastic opportunity to educate people,” he said.
The move will be a body blow to Detroit’s burgeoning bar and restaurant scene. Not so long ago car execs would drive miles out of town to take visitors for dinner after the show passing miles of burned-out houses and blacked-out streets. Now once scary streets are filled with bars and restaurants selling local beers, craft cocktails and posh pizza.
But as the car industry knows, you can’t stand still, said Baruah. “The greater risk is not moving to the summer. Any change has inherent risk but sometimes making no change is the greatest risk of all.”