The Return to Optimism – NAIAS 2012 Wrap Up
Aaron Bragman, IHS Automotive

In the past few years, it has been difficult to get excited over the North American International Auto Show (NAIAS) in Detroit, or any auto show in the country, for that matter. They were depressing events in many ways for analysts, especially when discussion with the media of new models was replaced by discussions of job loss, plant closures, buyouts, bailouts and bankruptcies. At General Motors, brands were disappearing, programs were being delayed, and everyone wondered if the new government-owned firm could find buyers in a country still reeling from recession. In Chrysler's case, the display was literally dark just two years ago – the lights were off, there was nothing new to see and everyone was just waiting to see if the company could survive 2010 while it raced to reinvigorate its line-up.

What a difference two years and $80 billion makes. The buzz at this year's NAIAS was not about survival of the Detroit Three, but of the astonishing comeback of the Detroit Three and the progress that has been made since bankruptcy. It was about the foreign press agreeing that American-brand cars are no longer behind the curve with respect to their competitors, that they have caught and even surpassed their rivals in many cases. All three domestic automakers are reporting market share increases for 2011, which can be pinned on a confluence of competitive new product, rising consumer confidence and both the missteps and misfortunes of foreign competitors. But the result of the past years of upheaval was clearly on display at NAIAS – profits, and an ability (and willingness) to spend money again on things like concept cars, interactive multi-tiered displays and vehicles other than the latest lithium-ion electro-hybrid mega-mileage wundercar. Given that there are few ills in this industry that cannot be cured by good product, the optimism was palpable at the show, and a welcome change from recent years – we as analysts could talk about cars again, instead of cash flows.

Three overall themes emerged from this year's NAIAS. First is the aforementioned return to strength and hopeful momentum of the domestic industry. But two more themes were present: the inclusion of next-generation infotainment technology across segments and the invisible incorporation of fuel economy technology across segments. Many automakers displayed new infotainment systems that bring connectivity to the automobile in ways far more seamless and in-depth than ever before, with examples like Cadillac's new CUE system leading the way. Crossing the increasingly blurry line between automotive and consumer electronics technology was a strong theme this year, as evidenced by the number of media who immediately fled NAIAS for the Consumer Electronics Show in Las Vegas as soon as the Press Preview days were over (and in some cases, before).

The third trend is the incorporation of fuel economy technology, such as the massive proliferation of downsized, boosted four-cylinder engines, most around the 1.4-2.0L displacements. But the inclusion is largely invisible, resulting in 40 mpg cars becoming increasingly commonplace, and putting out a wake-up call for automakers who have hinged their futures on hybridization over improvements to the internal combustion engine. Eight- and even nine-speed gearboxes were on display, as were lightweight materials for mass-market models. The only difference is that now these technologies are in showrooms, technologies of today, and not simply plans for tomorrow.

Aaron Bragman can be contacted at Aaron.Bragman@ihs.com.