Five Lessons From the New York Auto Show

I'm just back from two days at the New York International Auto Show, which is open to the public until April 11. It was probably the greenest auto show I've ever been too, and that's saying a lot because the industry has been moving in that direction for years now. Carmakers without a hybrid introduction and a battery vehicle on the horizon are clearly falling behind. And the cars in New York are production vehicles, not concepts.

Here are five lessons I gathered walking the floor and eating the English muffins (sorry -- they were, of course, crumpets) at the Bentley lunch.

1. Green is cool, but it's also vital for the bottom line. On Thursday, the EPA and the Transportation Department announced final fuel economy and greenhouse gas rules that will require cars to reach 35.5 mpg by 2016. They can go as low as 34.1 mpg if they offset fuel economy with other greenhouse-enhancing features, including the use of cleaner air-conditioning refrigerant and flex-fuel vehicle production. The total cost to the industry is $52 billion. Consumers will pay $926 more per vehicle by 2016, but government regulators say they'll also save $240 billion in fuel. To meet the regulations -- which start out relatively easy in 2012 but ramp up sharply in the later years -- automakers need green fleets and more fuel-efficient cars. Perhaps that's one reason Hyundai said at the show that it is switching from brawny V-6 engines to fours, some turbocharged.
2. Youth appeal means loud music and blinking lights. Scion now has a four-vehicle lineup for the first time in its history, and in unveiled both a new edition of the tC sport coupe and the tiny iQ microcar in New York. The company is relentless in presenting these new models (and in fact the whole brand) as appealing to the hip urban driver demographic. The "premium subcompact" iQ, only 14 inches longer than a Smart car (Scion called it "Smart-er" and "Mini-er") is just the thing to squeeze into a tight downtown parking space, while on the way to your Internet marketing job. "Scion is the youngest brand in the industry," said Jack Hollis, Scion vice president. The new cars were presented in a barrage of flashing lights and pounding music that transformed the Javits Center's Crystal Palace into a 1970s-era disco. Hollis also said that Scion, which has sold 800,000 cars in seven years, is the "most ethnically diverse non-luxury brand."
3. Electrifying cars means outside partnerships. Few automakers have battery expertise (or capacity) so nearly all have inked agreements with cell and pack providers. But there's more: In New York, Ford announced a partnership with Microsoft (which already collaborates on the Sync entertainment system) to ease battery charging. Ford has a non-exclusive deal to tap into Microsoft's existing Hohm cloud-computing site to monitor battery car state of charge and integrate that charging with owner's busy, web-posted schedules. Change an appointment, and Hohm will adjust your EV charging schedule. A new app will also allow checking your car's state of charge from cell phones.
4. The industry wants to move forward. Last year was miserable for the industry. Sales scraped bottom, and Toyota -- one of the few that was surviving the downturn fairly well -- recalled eight million cars. At auto shows last year, several brands didn't even put in appearances, and those that did had sparse displays and few new model introductions. But the March results are in and things are looking up. GM, Toyota, Ford, Honda, Nissan, Volkswagen, Kia and Subaru all saw sales hikes of more than 20 percent over the same month's results in 2009. Only Chrysler saw a decline among companies with Top Ten market share. In New York, there was a new confidence, a modest return to the customary glitz, and lots of plans for future product. There were 20 new vehicle launches.
5. The displacement race is (at least temporarily) over. In New York, Hyundai set the pace with introduction of the Sonata Turbo, which uses a two-liter four-cylinder engine to produce 274 horsepower (and 22 mpg city/34 highway). John Krafcik, vice president of Hyundai Motor America, made the point explicit by showing a chart proving that his four offers more horsepower than its V-6 competition, not to mention 269 foot pounds of torque. There's a new hybrid version of the Sonata, too, but that's another story. There were few true behemoths introduced in New York, though in that regard the 2011 Infiniti QX56 really stood out -- and took up a lot of space. "Is there still a market for these super-size SUVs? The New York Times asked. I hope not. This giant uses a 5.6-liter V-8 with 400 horsepower to lumber around.