Wednesday, November 26, 2008

In tough times, Detroit auto show drives on

Some firms aren't coming to Cobo event, but Ford and GM unveiling key models


Plans for the 2009 North American International Auto Show have been scaled back, and some automakers have backed out.


As economic pressure builds on automakers, the impact on the 2009 North American International Auto Show in Detroit threatens to cut into much needed revenue for charities, catering companies and exhibit builders.

This year's event will be without seven automotive manufacturers that typically fight for precious space at Cobo Center, and many of the manufacturers that remain are cutting back on activities.

"Scaling back would be an understatement," said Scott Stubbs, president and chief executive officer of Warren-based H.B. Stubbs Cos., a company that builds exhibits for automotive companies. "There is a real imperative to cut costs and save on cash."

The auto show is perhaps the region's most important annual event, both from a glitz and real-dollar perspective. But much like the rest of Detroit, the show is feeling the effects of cost-cutting across the industry.

Each January, the event draws about 6,000 journalists from across the globe -- helping to maintain Detroit's profile as an automotive center.

It also draws hundreds of thousands of public visitors and annually raises about $6 million for 11 children's charities in a one-night event, which attracts about 15,000 people.

Charity preview a priority

But ticket sales have slowed for the charity preview -- the region's highest-grossing annual single-night fund-raising event.

"As an organization that was one of the founding partners of charity preview, we are thrilled with the event, but we are very concerned this year," said Len Krichko, president and CEO of the Boys & Girls Clubs of Southeastern Michigan.

Last year's charity preview raised about $6 million, and the portion that goes to the Boys & Girls Club is a significant part of the organization's annual budget.

Joe Serra, senior cochairman of the auto show, said sales of the $400 tickets for the charity preview are down about 3% from where they were at the end of November last year.

"That is the one event where I am going to plead to the public for support, because as we all know, those dollars go to children's charities," Serra said.

Last year, a short concert featuring Barenaked Ladies took place after the preview at Cobo Arena. Serra said organizers plan to hold a similar concert this year and add another undisclosed major entertainment event to boost ticket sales.

Serra said the auto show is bringing back an invitation-only event called the Gallery for wealthy individuals who are shopping for luxury cars such as Maserati, Lamborghini, Maybach and Bentley.

Manufacturers depart

Nissan Motor Co. stunned the Detroit Auto Dealers Association, the event's organizer, on Monday when it became the first major automaker to exit from this year's auto show.

Nissan said its decision was based on the big splash it made at the Los Angeles Auto Show earlier this month and the economic realities that the auto industry is facing.

"This is not in any way a commentary on auto shows in general or any auto show specifically," said Nissan spokesman Alan Buddendeck.

Other manufacturers that have backed out include Mitsubishi Motors Corp., Rolls-Royce, Land Rover, Ferrari and Suzuki. Porsche Cars North America Inc. was not part of 2008 show and is not returning for 2009.

Detroit's niche

Still, Serra said he is expecting that the show will feature about 45 new production and concept vehicles.

"Every show has their niche," Serra said. "And the Detroit show, our niche is the media. And in more cases than not, when these scale-backs happen ... that niche plays into our favor."

Even though General Motors Corp. has canceled its annual fashion show called GM Style, spokesman Scott Fosgard said the company plans to introduce three important vehicles -- Buick LaCrosse, Cadillac SRX and Chevrolet Equinox.

"Detroit is actually going to be a very big show for us," Fosgard said. "Now, we may not be doing all of the show-biz and Vegas-type actions, but I think we are going to have a lot of news, and we are going to do it in a way that is very cost-efficient."

Toyota Motor Corp. has canceled a news media event it typically holds at the Detroit Athletic Club, but plans to unveil its third-generation Prius and a new Lexus hybrid.

Honda Motor Co. still plans to hold a news conference to unveil its Insight, a new hybrid vehicle scheduled to go on sale in April, but said it has scaled back its original introduction plans.

Chrysler LLC said it only plans to host a news media party at a former Detroit firehouse across from Cobo Center on one night. In the past, festivities for journalists spanned several evenings.

Catering cuts

At this time last year, John Forte's catering company, Forte Belanger Catering in Troy, had booked about 10 events during the show, but so far this year, he has booked only one.

"I will say the bottom fell out," Forte said. "We have virtually nothing solid on the books for the auto show."

Forte said several potential events are on hold and may come through after Thanksgiving.

His situation is yet another sign that the 2009 auto show will be very different from any in recent memory.

Matt Prentice, CEO of Matt Prentice Restaurant Group, said the only event he has scheduled so far this year is for the charity preview night for Metro Detroit Area Ford Dealers.

"I would anticipate it's going to be a pretty quiet event from a food and beverage perspective," Prentice said of the auto show.

Renovation needed

But Serra argued that this is not the time to abandon plans to expand Cobo Center, the aging convention hall in Detroit where the show is held.

Legislation to create a regional authority that would oversee a $308-million plan to purchase, expand and renovate Cobo Center is pending in the state Legislature.

"Once we get through this and we get back to normal life, we will have as much need if not greater need," for a renovation and expansion of Cobo Center, Serra said.

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