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Triumphant Detroit set to shine at auto show
by Staff Writers
Chicago (AFP) Jan 12, 2013

The Detroit Three carmakers return triumphantly to their hometown auto show Monday flush with profits from popular vehicles and the rewards of successful -- though painful -- restructuring.

But the competition is not standing still, and with the United States one of the few bright spots in the automotive market, the fight for customers will be fierce.

"I don't think there's an automotive company in the world that doesn't view the US as the most important market to them," Joe Vitale, an automotive analyst with Deloitte, told AFP.

"Whoever wins in the US market is well positioned to win globally."

US sales are expected to rise to between 15 and 16 million vehicles this year after jumping 13 percent to 14.5 million vehicles in 2012, the biggest yearly gain since 1984.

With growth slowing in China and Brazil, and Europe in dire straits, the US market is even more important than usual.

Germany's Volkswagen, which cannot achieve its goal of becoming the world's biggest automaker without dramatically increasing its sales here, has already begun to profit from an aggressive plan to expand its US offerings.

VW's US sales jumped 35 percent last year to nearly 440,000 vehicles after its new Tennessee plant became fully operational, boosting its share of the market by half a point to three percent.

German carmakers Mercedes, Daimler and Audi are also looking to the US to offset weakness in Europe and to maintain their solid advantage in the luxury market over less prestigious US and Asian brands.

General Motors, which remains firmly in the top spot at home with a 17.9 percent share, lost market share after eliminating brands to streamline operations.

Yet the firm is also expanding and reaping profits huge enough to buy out what was left of the US government's stake obtained after financing GM's 2009 bankruptcy.

Japanese giant Toyota commanded 14.4 percent of the US market last year as sales rose 27 percent. It is forecasting an even better performance in 2013 now that it has recovered from the devastating 2011 tsunami and a series of mass recalls in 2009 and 2010.

But Ford does not look ready to give up the number two spot in its home market, even though its market share slipped by over a point last year to 15.5 percent.

After years of retrenchment and painful restructuring, Ford is expanding again and on Friday announced plans to add 2,200 salaried positions -- mostly in engineering, production and IT -- in the United States.

It has also said it will double its dividends in 2013.

Chrysler has clocked a remarkable 33 consecutive months of sales gains in the United States since emerging from bankruptcy under the stewardship of Italy's Fiat in 2009, which is now relying on Chrysler's huge profits to offset losses in Europe.

That has allowed it to maintain its lead over Honda for the number four spot in the market, with 11.1 percent to 9.8 percent respectively, even as the Japanese rival posted stronger gains last year.

The renewed financial health of the Detroit Three after years of bleeding balance sheets comes after mass layoffs and plant closures.

"The difference is that now automakers and auto suppliers are making money at volumes where they weren't making money before," said Dave Sergeant, an analyst at JD Power.

"They've taken a lot of cost out and the industry's in a much healthier state than it has been for a number of years."

GM and Ford have also shown important restraint by cutting production rather than trying to hang onto market share by offering damagingly deep discounts, noted Standard and Poor's equity analyst Efraim Levy.

Now that their books are in order, it's time for the Detroit Three to show their investments in new products hit the mark, Levy said.

"That's the test we're going to see now," he said in an interview. "The competition is not waiting."


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