JANUARY 3, 2002

Car manufacturers gather in Detroit

THE North American International Auto Show, which kicks off in Detroit on Sunday, is expected to see a fair amount of soul-searching amongst the car manufacturers as they face up to the first serious recession in a decade. Sales are expected to fall in all three of the major car markets around the world in the course of this year and the industry is trying to come to terms with how bad the economic slowdown could be - and how they can best handle it.

It has long been said that there are too many manufacturers in the market and according to the latest figures available the industry has 30% too much manufacturing capacity with the potential to build 80m cars a year and demand for only 53m. Several of the biggest car companies have been busy closing factories and laying off staff to avoid losses while others have decided to keep up production and boost sales by offering cheaper deals. This however has reflected in profit margins in recent months. The emphasis now seems to be shifting to producing the right cars for the markets and this is where competition can help as success on the race tracks does help sales. The Detroit show is expected to be the showcase for the latest niche products as the manufacturers battle to hold on to their market share.