Detroit auto show brings optimism and caution

DETROIT - U.S. automakers and officials at the Detroit auto show struck an optimistic yet cautious tone on Monday as they sought to put a toxic year of slumping sales and massive government aid behind.

This is a new day, said U.S. Transportation Secretary Ray LaHood, who spoke at the opening of the annual show. Today is a new day. Today is a new beginning, really.

Following a disastrous year that saw GM and Chrysler LLC forced into government-led bankruptcy, many executives said 2010 should be much better.

Ford Chief Executive Alan Mulally described analyst forecasts for U.S. light vehicle sales of between 11.5 million and 12.5 million units this year as conservative.

U.S. auto sales plunged to 10.4 million in 2009, 39 percent below a peak of 17 million in 2005 during the recent ill-founded economic boom.

The big, unanswered question here, however, is what the U.S. economy will do following its longest, deepest downturn since the 1930s.

General Motors Co Vice Chairman Bob Lutz said that while the No. 1 U.S. automaker was aiming to return to profit in 2010, that could not happen if the U.S. economy took another downturn.

Then, of course, all bets are off, he told Reuters Insider.

It is just over a year since America's automakers went to Washington amid the worst sales slump in decades to seek emergency government funding.

For an American public already in a hostile mood following the injection of taxpayer money into the over-leveraged and profligate U.S. financial sector, this was a bailout too far.

'A LITTLE BIT OF AN INFUSION'

Anger over the automakers' pleas for aid was heightened by revelations that they had used expensive corporate jets to travel to Washington to cry poverty. If nothing else, it was an ignominious moment for the U.S. auto industry.

In a flash of humor at the show, that dark moment in American car history was honored by local company Great Lakes Coffee, which served its own Bailout Blend coffee.

Just over a half year later, the U.S. government pushed both GM and Chrysler into bankruptcies, supplying an injection of cash while the automakers were forced to cut thousands of jobs, shutter plants and slash their dealer networks in order to adjust to a smaller U.S. auto market.

Neil De Koker, president of the Original Equipment Supplier Association which represents auto suppliers, said the bailout of automakers and auto suppliers had cost U.S. taxpayers some $120 billion.

This was a good investment of taxpayer dollars in an industry that needed a little bit of an infusion of resources, LaHood said in defense of that aid.

LaHood was one of several U.S. officials on hand for the opening of the auto show. House Speaker Nancy Pelosi and members of the Michigan congressional delegation were also on hand.

They made a great investment in GM, said GM's chairman and acting chief executive, Ed Whitacre. We're going to pay them back and exceed their expectations. GM is back.

Sales at GM fell 29.7 percent -- compared with an industry-wide drop of 21.2 percent in 2009 -- while Chrysler sales plunged 35.9 percent.

Ford, which did not take government aid, saw its sales fall 15.3 percent. The company received an additional boost on Monday when it swept the 2010 North American Car and Truck Awards.

The Ford Fusion Hybrid won car of the year and the Ford Transit Connect triumphed in the truck category.

With the outlook for 2010 sales still uncertain, many automakers used the Detroit show to tout upcoming electric car technology, an area that the U.S. government has backed with subsidies and low-cost loans.

Others, however, warn that it will take a long time to get American consumers used to the concept of electric cars.

European people are ready to switch, but it will need time to change, said Gildo Pallanca Pastor, CEO of Monaco-based electric sports car maker Venturi. Conventional cars have been around for more than a century -- it's not going to change in five minutes.

Other executives here warned against prematurely deciding that the U.S. recession -- which has battered consumers, left 10 percent of Americans unemployed and wiped out trillions of dollars in home equity -- is over.

In 2009, we discovered we have a new competitor that we have never dealt with before, and it's savings, Jim McDowell, American head of BMW's Mini unit, told Reuters. Anything that throws major elements of uncertainty in front of the consumer are the kinds of things that could depress sales.

But ultimately sales will increase because the car fleet is getting older and older, he added.