The L.A. Auto Show Will Be Abuzz About Two Executives Who Are MIA
(Bloomberg) -- Two of the biggest stories at this week’s Los Angeles auto show will be the no-shows: Nissan’s Carlos Ghosn and GM’s Mary Barra.
An event that was primed to be a coming-out party for a Jeep pickup and all-new SUVs from Honda and Hyundai will be abuzz about Nissan’s shocking ouster of its longtime leader and General Motors’ announcement that it’s closing seven plants, eliminating more than 14,000 jobs and dropping several unpopular sedans.
Ghosn’s downfall leaves an industry that already was in the midst of seismic change without one of its fiercest advocates for the merits of free trade, electrification and personal-car ownership. And GM’s news illustrates the lengths Barra is willing to go—with the company’s earnings and the U.S. economy still strong—to avoid the complacency that contributed to the Detroit-based automaker’s 2009 bankruptcy.
Here’s what to expect from the media events starting Tuesday:
Even before Ghosn’s arrest last week surfaced simmering grudges involving the world’s largest automotive alliance, Nissan was having trouble in the U.S. market. Slumping sedan sales—Altima deliveries are down 17 percent this year through October—contributed to second-quarter profit missing estimates, as the company trimmed production to reduce inventories.
The reveals Nissan has planned for L.A.—which include an only slightly facelifted Maxima sedan—are unlikely to be the sort of dramatic debuts that will change the conversation, let alone the course of the company’s business in North America. Ghosn’s exit is a distraction for an automaker that already needed to kick bad habits—namely its heavy reliance on discounts and sales to rental-car companies.
Barra will skip this week’s festivities in L.A., and GM isn’t announcing any new models this week. Instead, it may be one of the last times models such as the Chevrolet Volt, Buick LaCrosse and Cadillac CT6 will grace the floor of a major U.S. auto show. Those sedans, along with the Chevy Cruze and Impala, are being discontinued for the North American market as sport utility vehicles and pickups surge to roughly 70 percent of total U.S. sales.
Four factories in Michigan, Ohio and Maryland, plus one in Canada, could close by the end of 2019 if GM and its unions don’t come up with an agreement to allocate more work to the facilities. Another two plants will close outside North America.
Other automakers’ executives are likely to field questions in L.A. about whether investors ought to view GM’s move as a sign of an impending downturn, and if they too have plans to cull their car lineup as demand for those models craters.
The SUV will dominate the show, underscoring why GM— along with Ford and Fiat Chrysler—is getting rid of so many sedans.
Two companies better known for sedan supremacy—Honda and Hyundai—will go after buyers of bigger, brawnier SUVs. Honda is bringing back the Passport, filling a gap that’s existed since the original was discontinued in the early 2000s. It’ll be just the fourth SUV in the brand’s lineup, slotting between its top-selling CR-V and the three-row Pilot. Hyundai’s Palisade will be its biggest vehicle yet, eclipsing the Santa Fe XL.
It’s going to be a busy show for luxury SUVs, too. BMW is adding a fifth model to its X series with its largest yet, the X7, while Daimler’s Mercedes-Benz will stage the U.S. debut of the revamped GLE. Ford is trying to revive its struggling luxury line with the new three-row Lincoln Aviator, a smaller sibling to the hot-selling Navigator.
Are You Not Entertained?
Perhaps the most-anticipated new product in L.A. will be Fiat Chrysler’s Jeep Gladiator.
It’s been 26 years since Jeep had a pickup, but soaring sales of mid-size models during the past four years have lured Ford, and now Fiat Chrysler, back into the market. The Italian-American automaker is betting that high-margin vehicles such as Gladiator—based off the iconic Jeep Wrangler—will help shore up profits even in a cooling U.S. market. The company will take the wraps off the truck on Wednesday.
©2018 Bloomberg L.P.