Gloom hangs over Toronto auto show

Automakers at this year's Canadian International Autoshow will have an arena full of new hybrids, advanced fuel cells and electric vehicles on display, but what they really have to sell is the idea that they are going to survive the drastic downturn in their industry.

Organizers of the auto show, which begins with a media day on Wednesday and then opens to the public on Friday, have dubbed it "The New Era."

The reference is to the big move toward fuel efficiency and environmental sustainability that all the automakers are touting. However, it could just as easily have alluded to the seismic shift in the auto-sector landscape.

"Normally this takes two or three years to get to these levels," said Dennis DesRosiers, an automotive industry consultant, referring to a precipitous decline in consumer demand. "This happened in a matter of two months, and it is as deep as it's ever been."

Auto sales have fallen for three months in a row in Canada, dropping 25 per cent in January alone.

Those numbers are almost rosy compared with the figures in the United States, where the sales have been in a freefall due to tight credit and the economic recession. Around nine of 10 cars assembled in Canada are sold in the U.S. market.

For that reason, the automakers are going to have to talk about more than just cars at this year's auto show.

"I think you will see a lot of manufacturers talking about confidence and the confidence that they are going to be around in light of all the negative news that's taking place," said Richard Cooper, executive director, Canada, at J.D. Power and Associates.

As the show begins in Toronto, a Chrysler assembly plant just down the road in Brampton, Ontario, sits temporarily idled, along with three U.S. Chrysler plants, as the company tries to adjust to the rapid decline in demand.

At General Motors Corp, 10,000 white-collar workers will lose their jobs, the company said on Monday. Later this month, GM will permanently shutter its award-winning Oshawa, Ontario, truck plant.

Just to survive into this year, GM and Chrysler have had to ask for emergency loans from the governments of the United States, Canada and the province of Ontario. Ford Motor Co has asked for a line of credit to be tapped if conditions worsen.

It's not just North American auto companies that are hurting, as credit has tightened globally and recession spreads worldwide.

European carmakers warned Tuesday that their production could fall by 15 per cent this year and have asked for more financial aid.

In Japan, Toyota Motor Co forecast its first annual loss ever and Nissan Motor Co (7201.T) said it would record its first annual loss in 14 years.

"The only light at the end of the tunnel has a freight train attached to it," said DesRosiers, who added it will take two to five years for this cyclical downturn in the industry to work its way through.

There are slim pickings for new vehicle launches at this year's auto show, but there is expected to be a wide array of new technology on display, from alternate fuels and powertrains, to electric cars.

But while the automakers are talking green, their real message will be about confidence, said J.D. Power's Cooper.

"It's all for naught if consumers don't have confidence and it's not just confidence in the economy and the financial situation, but, I think, confidence in a brand and the manufacturer," he said.

The Canadian International Autoshow runs until Feb. 22 at the Metro Toronto Convention Center and Rogers Center.

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