Good News for NAIAS! Good News for Detroit!

by Ronnie Schreiber

Published: December 22nd, 2008

good news for naias good news for detroit

Last Friday was a good news day for Detroit. No, I’m not talking about President Bush’s loan package. That wasn’t so much good news as a stay of execution, with a case on appeal. And it wasn’t shadenfreude. What joy can anyone in the auto biz take from the reports that previously invincible Honda is losing money and cutting production? Or that Prius sales are down 50 percent, Toyota has suspended work on their proposed Prius plant in Mississippi, and the company will have a loss this fiscal year, the first in 71 years? No, the good news came, from all places, The Michigan legislature.

The august body passed legislation funding projects that could help the city of Detroit recover economically. What got the most attention, both from the general media and from car folks: a $288m dollar plan between the state, the city of Detroit and Wayne, Oakland Macomb counties. The partnership will improve and expand Cobo Hall (by 166k sq. ft.) to provide more space for exhibitors and allow Detroit to keep the North American International Auto Show (NAIAS). The refreshed and enlarged Cobo will join the newly renovated Book Cadillac hotel in the effort to increase Detroit’s convention business.

The legislature also funded a 3.5 mile light rail transit system to link the New Center area and downtown. This will also help convention business, as well as nurturing the nascent development along the Woodward corridor in recent years.

Otherwise, meanwhile, let’s face it, it hasn’t been a good year for the Detroit auto show. Nissan/Infiniti and Mitsubishi dropped their factory displays. Porsche, Land Rover, Ferrari and Rolls Royce pulled out entirely, That’s notwithstanding the success of last year’s “Gallery” program, which gave hundreds of well-heeled guests from around the country a private showing. A marketing event that racked-up a reported $3m worth of luxury car sales.

In a speech to the Detroit Economic Club, NAIAS’ senior co-chairman acknowledged the “dire times” facing the auto industry. Joe Serra sold the silver lining, asserting that the departing manufacturers had opened the door to other companies who wanted in. In fact, Serra said the total number of exhibitors on both floors will increase by two, and there will be more world premieres this year than last.

Still, this year’s NAIAS will be a low-key event. The New York Times reckons you can tell how the domestic auto industry is doing by the size of the shrimp at the Detroit auto show media preview. This year, swag shrimp of any size will be few and far between. Chrysler will forgo their usual showbiz introductions; all the manufacturers will have simpler displays. They’ll be fewer pretty girls, less glitz and more focus on product and business plans.

That said, the incrementally increased number of exhibitors will be displaying cars of particular interest to enthusiasts. The Bugatti Veyron will make its first ever NAIAS appearance. Lotus will have its first factory NAIAS display.

The success of the Elise and derivatives, as well as Lotus’ involvement in the development of Chrysler’s EV sports car, makes a NAIAS booth for Lotus a natural idea. Technology partner and electric car pioneer Tesla will have also have its first Detroit auto show factory booth, hawking their lithium-ion-powered Roadster. Self-appointed Tesla CEO Elon Musk will be speaking to the Society of Automotive Analysts at a NAIAS related event on January 13.

Also on the electric car front, Chinese automaker BYD plans to use the NAIAS to introduce a serial hybrid with a 60-mile batteries-only range. BYD produces about 25 percent of the world’s cell phone batteries, so they may have a leg up on other manufacturers’ electric plans. China’s Brilliance Auto will display for the first time. Along with BYD, Brilliance will be the first Chinese manufacturers to display on the main floor in Detroit.

Meanwhile, there’s other game afoot. To keep Michigan in the running for tomorrow’s battery technology, the state legislature approved a tax credit package intended to make the state a national center for the development of batteries for transportation. The bill will provide up to $335m in tax credits from 2001 to 2016.

Legislators and Gov. Granholm hope that the tax credits will help Michigan businesses access the $1b that Uncle Sam’s investing in battery research. While it would be better if the news was about private sector investment instead of government funding, it’s nice to see the state and federal government offerring local industry and innovation a helping hand.

Ronnie Schreiber

Ronnie Schreiber edits Cars In Depth, the original 3D car site.

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Ronnie Schreiber on Dec 24, 2008
I’ve been to Cobo Hall. They enlarged it back in the 90’s. What, that wasn’t big enough, even with fewer and fewer people living there? They keep expanding McCormick Place and the last time I looked the population of the metro Chicago area hasn't increased significantly. Michigan has lost population due to the economy here over the past few years but the population of SEMI has been pretty stable at ~4 million for a while. Most of the decline in Detroit's population, about a million people since 1960, is attributable to people, white and black, moving to the suburbs. And what the hell happened with that People Mover? Oh yeah, it was GOVERNMENT that created it, right? Nah, it wasn't government, it was Coleman Young, HMFIC (though I have black friends who use a different version). So where’s the money for the “new new” Cobo expansion going to come from? The poor saps that live in Wayne or Oakland counties, or farther away like Lansing and Grand Rapids? Or will the good people of Ohio, West Virginia, Utah, New Mexico, Colorado, Arizona, Florida, the Dakotas and Carolinas be forced at the point of a gun to assist with that little handout? Oakland county is one of the wealthiest counties in the country so it's certainly the wealthiest in the state. In any case, it would have taken less time to Google [cobo expansion taxes] than writing the above paragraphs, but I suppose it's more fun to knock Michigan. From the Freep. To pay for the $279-million expansion, the agreement extends to 2039 taxes on statewide liquor sales and metro Detroit hotel-motel rooms. Those taxes – 4% on poured liquor and 1% to 4% on local hotel rooms -- were to expire in 2015. The state will kick in $9 million. Also, $16 million would be funneled to Cobo Center from the state’s cigarette tax revenues through 2039. To reduce the original $308-million price tag for the project, sales and use taxes will be exempted for contractors involved in the construction. So no increased taxes. The $9 million from Lansing comes out of the general fund and represents a little more than a dollar per Michigan resident. One very cool idea concerning Cobo that wasn't part of the package, though it may be enacted, is that the sales and use tax exemptions will be extended to sales within Cobo after the expansion. That would mean that sales of cars at the auto show (which are done at the Chicago show but not currently permitted by DADA, the NAIAS organizers) or at the big boat show (Michigan has more boats registered than any other state, something to do, I guess, with those inland lakes mentioned above and those big wet things called the Great Lakes) would be exempt from sales and use taxes. Saving 6% on the price of a new car or boat might even attract buyers from Ohio, Indiana and Illinois. Boy, that would surely piss off the Chicago Auto Show.

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Rix on May 12, 2009

In the end, Detroit is going to need reasons for skilled professionals and businesses to locate there. Imagine this: "Yeah, we're asking you to relocate from LA to Detroit." Most people would say "You gotta be _______ me." Like it or not, Detroit's reputation is pretty poisonous. I don't think most of my co-workers would even go to a convention in Detroit. Regardless of the facts on the ground, they imagine it to be Beirut on the lake.

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