By David Welch
The mood in Detroit is considerably better at this yearâ€™s North American International Auto Show than it was a year ago when General Motors was hunting momentum and Chryslerâ€™s very survival was in question. Iâ€™ll get into the new models and concept cars as they roll out. In the meantime, here are a few notable comments from the auto executives I tracked down at the show.
Chrysler going public
Fiat-Chrysler CEO Sergio Marchionne said he wants to take Chrysler public in the second half of this year. Fiat wonâ€™t sell any of its Chrysler stock. The sellers will be the United Auto Workers retiree healthcare trust, and possibly the U.S. Treasury Department and Canadian government.
The Italian automaker owns 25% of Chrysler. The UAW owns 63.5% of Chrysler. The U.S. Treasury holds 9.2%, while Canadian municipalities have a 2.3% stake. Marchionne told reporters that he wants to pay back $7.5 billion in debt to the U.S. and Canadian governments in 2011 and then go public. Following GMâ€™s successful IPO, Marchionne says Chrysler can launch its IPO following a couple quarters of profitability. â€œIâ€™d love to do it in the second half of this year.â€
IPO yes, but electric carsâ€¦ maybe not
Marchionne bucked the trend among auto executives by casting some doubt on the potential of electric cars. Fiat plans to sell an electric version of its tiny 500 hatchback, he said. But thatâ€™s not where the market will be. If carmakers want to meet fuel economy regulations and boost efficiency, theyâ€™re better off just wringing more mileage out of gasoline engines, he said. â€œIâ€™m reluctant to embrace full electrics as a solution,â€ Marchionne said. â€œThe dollars spent for reduction in fuel use is not there. We have to be careful not to chase a rainbow.â€
BMWâ€™s U.S. boss throws down the gauntlet
BMW and Audi have gone toe to toe with their advertising efforts, taking shots at each other in the past. Audi had a billboard featuring the A4 that read, â€œYour move, BMW.â€ In response, BMW put up its own billboard for the 3-series saying, â€œCheckmate.â€ Audi has been gunning for its German rivals with its own brand of German engineering and sporty luxury cars. Jim Oâ€™Donnell, CEO of BMW US, took a shot at his rivals. With 220,000 cars sold in the U.S., BMW more than doubled Audiâ€™s take in the market. Audi is â€œtoo worried about having a go at Mercedes and BMW,â€ Oâ€™Donnell said. â€œThey have to learn to swing first. I think their whole communications strategy is wrong.â€
GM tries to make money on small cars
For Detroitâ€™s carmakers, small-car profits have been almost as elusive as a playoff appearance by the Detroit Lions. GM-North America President Mark Reuss said in an interview that GM should be able to make money on cars like the Chevy Cruze compact and Sonic subcompact, which are built in the U.S. with union labor. The companyâ€™s break-even point has fallen drastically since bankruptcy wiped away billions in debt and healthcare obligations. GM is wagering that cars like the Cruze and Sonic will offer a sportier ride and more creature comforts, so they should get a better price. The Buick Verano, which also had its debut at the show, will be built with many of the same parts as the Cruze. Its higher price should help the entire small-car program make money, he said.
The gamble is that cars like the Sonicâ€”which have traditionally been cheap, entry-level transportationâ€”can fetch a higher price by offering more horsepower, better ride and handling and features like MyChevrolet, a phone app that allows drivers to unlock doors, start the engine and check the vehicleâ€™s diagnostics remotely. Ford is making the same bet with its Fiesta, which can sell for more than $20,000. Chevy has not priced the Sonic, but GM wonâ€™t set a ridiculously low price on the model, Reuss said. â€œIf weâ€™re going to make the cheapest, silliest car in the U.S. and try to make money on it, that isnâ€™t going to work,â€ he says.