I fondly remember the first (and only) time I went to the International Auto Show in Detroit. On that blustery Saturday morning in January 1997, I had recently begun my last semester of college and I was lamenting with a couple of friends about how we had never been to the largest and most famous auto show in the country. So, without much ado, we decided to climb into a car and drive one hour east to the Motor City.
I had never been to Cobo Hall before either, and was initially in awe at how vast and well-laid out the floor was. I couldn't wait to see the latest and greatest that each of the world's automakers had to offer, but of course, being the gearhead that I was, I was mostly interested in who had the coolest muscle car. Of course the Big 3 had their representation with the latest Ford Mustang and the (sic) Dodge Stealth, but I could not overlook what foreign automakers like Porsche (POR3.DE) and Volkswagen (VOW.DE) were set to unveil. The "concept car" section was neat to peruse as well, though back then "concept cars" were vehicles that looked more like miniature spaceships than automobiles. Overall, horsepower and testosterone seemed to be the underlying themes of that particular auto show.
In the past 11 years and two presidential terms, has much changed?
Yes -- and quite dramatically. While reading the Wall Street Journal a couple of days ago, I noticed that the headlines were more centered around which automaker could bring the most fuel-efficient car to market the fastest. General Motors (GM) announced it had taken an undisclosed stake in venture-backed cellulosic ethanol provider Coskata, rolling the dice that flex fuel vehicles will become the norm down the road. While cellulosic ethanol is a few years away from commercialization, there are already several players competing in that segment of the biofuels space, such as Spain-based biofuel maker Abengoa (ABG.MC), as well as North American pure plays Verenium (VRNM), BlueFire Ethanol (BFRE.OB), and Iogen. In the German automakers section, Volkswagen, Daimler, and BMW AG (BMW3.DE) all revealed their advanced diesel-powered cars that they planned to introduce in the US this year, hoping to reverse the long-standing negative sentiment that Americans have felt about diesel engines. And of course we can't forget Toyota (TM), the pioneers of the hybrid vehicle, who sold 180,000 Priuses in the United States last year, behind only the ever-popular Camry and Corolla models. Toyota unveiled its plug-in version of the hybrid vehicle, vowing to sell it in the United States by 2010. The plug-in hybrid is now the new "concept car" at the auto show, and one that should soon become reality.
Automakers certainly cheered at the latest version of the US Energy Bill, which was skewed heavily toward biofuels and energy efficiency. In an intensely competitive US auto market, the automakers will be scrambling to take advantage of the new rules now that the outlay of the industry has changed. But the question still remains of whether many American consumers will be willing to embrace these alternative fuels. I have no doubt that this new paradigm can be an effective means to rid ourselves of our oil addiction, however there is still work to be done. Incentivizing alternative fuels (which is being done now) and taxing fossil fuels (which we will hopefully see more of in a few years) is a good start.
In the meantime, will we see an increased dichotomy of automobile preferences among the American consumer; namely between those that are embracing fuel efficiency versus those who still feel the need for speed? We very well could....heck, if there is enough of a market for those sports car purists who want nothing to do with the alternative fuels of tomorrow, then those cars will still get built.
I have not been to the Detroit Auto Show since last century, however, just reading about the sweeping changes going on in the auto industry piques my interest to go again soon. What will be the new concept cars that I will see? Miniature spaceships that run on ethanol?? Perhaps so....
Disclosure: I do not own any of the stocks mentioned above. I do not (yet) own a hybrid or flex fuel vehicle.
Photo:Corvair Owner, Creative Commons, Flickr