Auto industry gloom hangs over Detroit car show, seven companies pull out

It's not surprising the pall that hangs over the auto industry is translating into less demand for dry ice and confetti at this year's North American International Auto Show.

The Detroit extravaganza, which begins with a press preview Sunday and runs for two weeks, is expected to be a more subdued affair than usual, especially for the financially strapped domestic manufacturers.

"I think it'll be more business than the glitz and glamour we've seen in the past,'' show co-chairman Joe Serra says of the domestics.

But show organizers were upset and puzzled when, one after another, seven foreign automakers pulled out of the show altogether.

The regret cards started coming in months ago and culminated in late November when Japanese-based Nissan and its luxury brand Infiniti cancelled their participation.

It joined Mitsubishi, Suzuki and high-line marques Porsche, Rolls-Royce, Ferrari and Land Rover.

Porsche has pulled out of all major North American shows, including February's Canadian International Automobile Show in Toronto.

"I absolutely don't understand it myself,'' Tom Torks, president of the Toronto show, said of Porsche's decision. "I think it's completely unprecedented and the wrong move.''

Porsche was a no-show at Detroit last year too and Serra says he understands why small-volume luxury brands like Porsche pulled out.

"Their niche is so small and so identified that they think they can reach their customer base in different ways,'' he says.

And Suzuki cancelled because it wasn't given space in Cobo Hall, the central showcase, he says.

But Serra is galled by Nissan's decision to withdraw.

"I'm a Nissan dealer myself,'' says Serra, whose store is in suburban Detroit. "I was disappointed. The Nissan dealer body hasn't been told `here's exactly why.'''

"Some of them I can understand; this one I'm baffled by.''

Nissan USA spokesman John Shilling says the decision was purely economic and not a reflection on the show's intrinsic value.

"We're evaluating all of our marketing activities to ensure we're reaching our target audiences, maximizing our investments,'' Shilling says from Nissan USA's Tennessee headquarters.

"Based on the fact we have no major new products to show or basically unveil at Detroit, which will impact the show's marketing effectiveness, we just decided to cancel our involvement.''

Shilling's comment hints at Detroit's real value.

All auto shows in North America are organized by local dealers _ partly as traffic builders for their existing products _ with participation by manufacturers.

But major shows are launch points for unveiling new models or leading-edge design concepts.

The New York and Los Angeles shows play that role but Detroit is by far the biggest. It attracted more than 6,000 journalists from 62 countries last year, says Serra.

While Nissan doesn't have any gee-whiz show cars or major announcements, it does have the new 370Z sports car and tiny, class-busting Nissan Cube, which go on sale this year and would get a promotional bounce from the overwhelming media presence, says Serra.

"The point I personally think they're missing is they're looking at it from public day or a sales opportunity versus a media opportunity,'' he says.

But Canadian auto-industry analyst Dennis DesRosiers says auto shows have waned in importance with the rise other promotional channels, especially the Internet.

"The big shows like Detroit have gone downhill even more since there isn't a need for a big show to reveal new vehicles for the first time,'' he says.

"With the Internet there is very little an enterprising auto journalist doesn't already know about the product they are about to unveil in front of you. The drama's gone.''

A spokesperson for Nissan Canada says it isn't following its U.S. counterpart's lead. Nissan will be on the Canadian show circuit, including Toronto, featuring the Cube, 370Z and new Infiniti G37 convertible.

Serra says despite the pullouts, the number of exhibitors is actually up by one, to 49, including a growing Chinese presence.

Brilliance, which builds BMWs for the Chinese market, is making its debut, while BYD _ which stands for Build Your Dreams _ returns for its second year.

The Chinese will also occupy premium floor space this time even though they don't sell vehicles in North America yet.

Despite the reduced hype, Serra says Detroit expects to draw around 700,000 people through its nine public days, while Torks says Toronto regularly draws about 300,000.

It's still good bang for the promotional buck, he says.

"At one point or another those people are going to be interested in buying a car,'' says Torks.

"Whether it's immediately or two or three years from now, it doesn't matter. They're all automotive consumers by their interest.''

Just how many are serious tire-kickers remains to be seen.

The U.S. auto market, which in its recent heyday reached 18 million sales annually, is expected to shrink to 10 million for 2009.

DesRosiers says total Canadian car and light truck sales for 2008 were around 1.64 million units _ down about one per cent from 2007 _ but are forecast to drop to about 1.52 million this year.