Industry gloom to cast shadow on LA Auto Show

New cars are supposed to be the main attraction when the Los Angeles Auto Show kicks off Wednesday, but dreadful U.S. sales, bailout hearings in Congress, and General Motors' decision to all but pull out of the event are sure to be the elephants on the showroom floor.

"It's like having a big Champagne party at a cancer victim's funeral," Rebecca Lindland, an auto analyst with the consulting firm IHS Global Insight, said of the show's timing.

Auto shows are an important way for carmakers to reach out to consumers, particularly those in the market for a new car. Some two dozen cars will make North American debuts and several top automakers will unveil brand new models during the Los Angeles show's media previews Wednesday and Thursday.

"L.A. and Chicago are very big consumer shows," said Michelle Krebs, editor of Edmunds' AutoObserver.com. "They draw a lot of crowds that are in the car buying market."

But she added: "We know sales are down - will they get those big consumer crowds?"

Despite the difficult market, carmakers will do their best to dazzle the automotive press. Keeping up the show's usual emphasis on fuel efficiency, Honda Motor Co.'s 2009 Insight will make its North American debut. Honda has promised that the Insight will be the cheapest gas-electric hybrid on the market, challenging Toyota Motor Corp.'s long-dominant Prius.

Ford Motor Co. plans to unveil new versions of the Ford Fusion, Mercury Milan and Lincoln MKZ at the show, including Fusion and Milan models with hybrid gas-electric powertrains. The cars are expected to have a significant new look on the outside, and Ford says the hybrids will have the best gas mileage in the midsize sedan class.

Chrysler LLC will offer its first public glimpse of its electric vehicle concepts, including a Jeep and a minivan that can go 40 miles on battery power before a small engine extends their range. Chrysler is hoping the vehicles will steal some of the limelight from the Chevrolet Volt, the much-touted gas-electric car General Motors Corp. unveiled in Los Angeles a year ago.

Other highlights will include the North American debut of an updated Mazda 3 sedan, which has been the Japanese automaker's top seller. Nissan Motor Co. will debut three new vehicles, while Toyota, Kia and others have unveilings of their own.

Still, industry watchers say the mood of the show will be noticeably more subdued. The crumbling economy has sent auto sales down 15 percent for the first 10 months of the year. In October alone, sales plunged 32 percent to the lowest rate in more than 25 years, and some analysts say November could be even worse.

"We are still getting devastating economic news from the consumer," Lindland said. "There's no indication that the consumer has been able to benefit from loosening credit markets."

Erich Merkle, lead auto analyst at the consulting firm Crowe Horwath LLP, said the current auto sales environment remains "abysmal."

"I'm very concerned right now for the industry as a whole," he said.

Detroit's automakers are begging Washington for a federal rescue after GM and Ford reported burning through a combined $14.6 billion in the third quarter. GM has said that it may not have enough cash to survive into next year and has warned that a bankruptcy filing would have a devastating impact on the industry as a whole.

Last week, GM said it no longer planned to unveil any new vehicles or send senior executives to the show. GM was going to unveil its new Buick LaCrosse sedan, and Vice Chairman Bob Lutz was expected to attend the media previews.

"It's going to be a very delicate balancing act of going to Congress and saying 'We need help' - and having dancing girls around their cars" at the show, Lindland said. "I think that may be why GM pulled out."

While the automakers unveil their new products in Los Angeles, Congress will be hearing testimony from labor leaders, experts and auto executives all week as it weighs whether and how to rescue the industry. Anxiety over the hearings is sure to spill over into the show, Krebs said.

"The mood will be not exactly exuberant," she said.

The show opens to the public Friday and runs through Nov. 30.

---

On the Net:

http://www.laautoshow.com