Detroit Car Show Preview: Ford, BMW, and Chrysler Try to Reshape the Industry – Businessweek

Posted: Tuesday, January 14, 2014

The car business isn’t so much about making great new models as it is about remaking them—again and again. For every revolutionary release there are scores of steady sellers updated and refreshed annually. For every Tesla (TSLA), there are hundreds of Toyota Camrys.

And when a particular model is really hot—when buyers are flocking to it—is precisely when car buffs and investors are asking how the next version is going to be faster, smarter, and more fuel-efficient. Cruise control is not an option; momentum is all.

As the auto industry comes off one of its best years on record, all eyes are on Detroit this week to see what the engineers and executives will roll out for Motor City’s annual auto show. There will be no shortage of “concept fare,” Jetsons-type shuttles that will never see an assembly line. But the most anticipated new vehicles are updates and overhauls of major model lines. Here are three expected reveals that could have a huge effect on the auto industry in 2014.

2015 Ford F-150
It’s difficult to overstate how big a deal this will be. Ford Motor (F)’s most popular truck is its best workhorse and the backbone of the U.S. market. Domestically, Ford sold a mind-boggling 763,402 of the machines last year, 2.6 times the sales of its next-most popular vehicle, the Fusion, and almost 60 percent more than the second-bestselling large truck, Chevy’s Silverado. The new F-150 “is the whole company, more or less,” senior analyst Bill Visnic says.

Ford’s update is expected to comprise unprecedented amounts of military-grade aluminum. Lighter than steel, the metal will be magic for mileage, but critics point out it’s also softer and less durable. Ford is going to have to overcome that bias if it expects to keep its hold on the category. And it’s going to have to convince buyers that the gas savings will be worth what could be more expensive maintenance and insurance premiums.

What to look for: Toughness. Will Ford drive it through a brick wall, beat it with sledgehammers, etc?

2014 BMW 2-Series
The Ultimate Driving Machine is still a finely tuned sales engine, but BMW (BMW:GR) lost its U.S. luxury crown to Mercedes-Benz (DAI) last year in part because its rival rolled out the CLA, a new class of sedan that starts at less than $30,000. In the few months these starter Benzes were available in 2013, North American drivers bought roughly 14,000, helping Daimler (DAI) sales top BMW by 3,300 cars for the year.

Starting at $33,025, the 2-Series is BMW’s answer to that—a squeeze into a smaller socioeconomic lane with a much bigger car than the 1-Series it will replace. The move is risky. If the company makes a car that’s too nice, buyers will forgo more expensive fare such as the 3-series, BMW’s bestseller. If it’s not nice enough, first-time BMW buyers won’t trade up when it comes time for a new car.

What to look for: Finishing. Does the car look and feel like a BMW, without, you know, looking and feeling like a BMW?

2015 Chrysler 200
Mid-size sedans are like smartphones: Two companies dominate, and the margin for error is incredibly low (see: BlackBerry (BBRY), Saturn, etc.). Chrysler’s version has done fine but never well enough to threaten the category leaders. Last year it slipped behind the Ford Fusion and Chevy Malibu, while Honda Motor (HMC)‘s Accord and Toyota Motor (TM)‘s Camry continued to dominate the space. Even Kia Motors’s Optima sold better in the U.S. last year.

What to look for: Design. Does Chrysler play it safe with a mild-looking car or does it go for an edgier, love-it-or-hate-it offering?


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