Automotive consultant and writer Edward Niedermeyer is impressed, more or less, by new model unveilings during preview week at Cobo.
"Domestic automakers returned the annual North American Auto Show to classic form this year, with a display that would not have been out of place in the heyday of the Motor City," he writes in a Bloomberg commentary.
"The good times won’t last forever."
But the 31-year-old opinion column contributor also has significant concerns about the U.S. industry.
The relative strength of America’s domestic car market is helping fend off some of the pressure to take innovative risks. . . .
Profits from these luxury vehicles may keep the good times rolling, but concerns that style may be trumping substance can’t be ignored. One of the only production-ready mass-market cars to debut this week, the Chrysler 200, drew praise for its sleek looks but was also criticized for its cramped back seat. . . .
This departure from fundamentals is troubling, considering that the good times won’t last forever.
Niedermeyer, based in Portland, Ore., senses potential financial risks for manufacturers.
With wages and employment stagnating even as easy credit fuels luxury car sales, it’s clear that the profits fueling the auto industry’s high times are built on a tenuous foundation. The car business has long been highly cyclical, to use the economist’s euphemism for downright bipolar, either generating huge profits or epic losses.
Automakers get into trouble when the heady highs blind them to the inevitable downturn and distract them from the fundamentals of their business. This basic dynamic was responsible for Detroit’s crash in the 1970s, and repeated itself most recently when the great SUV boom came to a shuddering halt with the gas-price spikes of 2008.
Surveying the glittering, high-priced luxury cars dominating the Detroit Auto Show, and seeing the once-humbled automakers returned to chest-thumping form, it’s hard not to worry that the industry is falling into its perennial trap.
