Ending Era Audi, Porsche, BMW and even Tesla reducing Detroit auto show presence

German execs are no longer braving Detroit’s frigid weather to make an appearance at the city's auto show, but neither is Tesla. Another sign that the trade fair is losing its significance – at home and abroad.
I rust, therefore I am.

German car industry leaders, like those at Audi, Porsche and BMW, all stayed home rather than head across the pond to the Detroit auto show. Year after year, international participation at the North American International Auto Show, as it is formally known, has steeply declined.

The trade show, established around Detroit’s “Big Three” American carmakers – Ford, Chrysler and General Motors – is on the cusp of irrelevance, with only a small number of German industry leaders coming to Michigan for the two-week event. An even bitterer blow for the trade-fair organizers was the notable absence of US electric carmaker Tesla.

Most US manufacturers are still heavily represented in Detroit, as are their Japanese and Korean counterparts, including Toyota and Hyundai, both of which have US-based production facilities. But even those in attendance scaled back their participation. Previously, up to 60 new models and concept cars were presented every year. This year, that figure was down to 20.

In Detroit, you get the cars of yesterday; at CES, the cars of tomorrow. Ferdinand Dudenhöffer, professor of automotive economics, Duisburg-Essen University

The main reason for the sharp decline in Detroit’s fortunes has been the rise of the Consumer Electronics Show (CES), which takes place the previous week in Las Vegas. With electronics increasingly vital to car manufacturing, the Vegas show is rapidly becoming the go-to event for car industry experts.

“In Detroit, you get the cars of yesterday; at CES, the cars of tomorrow,” says Ferdinand Dudenhöffer, professor of automotive economics at Duisburg-Essen University. Last week’s CES saw numerous announcements and new models in the area of electromobility and autonomous driving. A sample of the headlines confirms this: “Volkswagen to collaborate with Nvidia” or “Hyundai deal with Aurora” were typical.

CES was initially focused exclusively on IT, but as digitization becomes increasingly important for the car industry, the automotive sector more often takes center stage. Its focus on the future of mobility rapidly made CES a key industry gathering.

Detroit, by contrast, was dominated by traditional combustion-engine models: Tesla’s absence was very significant in this respect. When it comes to electric cars, Detroit lies far behind other prominent gatherings, including motor shows in Frankfurt and Shanghai, where tomorrow’s electric cars have proven massively popular.

“The Detroit show is fighting for its life,” said the manager of a major German auto industry supplier. For suppliers, the journey to Detroit is only worthwhile if a critical mass of carmakers is in attendance. Top managers only come if new models for the US market are on display, said Jörn Buss, car industry expert at consulting firm Oliver Wyman.

Rod Alberts, who has run the Detroit Motor Show for 24 years, is not taking things lying down. While speaking about the challenge posed by Las Vegas event, he said: “I like competition,” adding that CES is not a proper automotive show. Unfortunately, not many people seem to agree with him, not least those absent German car executives.

One of the only German car industry CEOs to be found at the conference was Daimler CEO Dieter Zetsche, whose company produces the luxury brand Mercedes-Benz. Mr. Zetsche, who served as Chrysler CEO for a number of years, likely attended out of loyalty for his former home. BMW CEO Harad Krüger stayed home, opting to send the company’s CFO Nicolas Peter instead, despite the US being a key market for the Munich-based luxury car manufacturer. Volkswagen CEO Matthias Müller also opted to stay in Wolfsburg.

Prior to the Dieselgate scandal, which unraveled publicly in 2015, VW would hold an annual company party in the US manufacturing hub, but last year VW sent a much smaller team overseas. Herbert Diesse, head of the VW core brand, was the only major company figure-head in attendance. It is not much of stretch to imagine that VW leaders are hesitant to step foot on US soil after the PR nightmare unfolded and VW manager Oliver Schmidt was arrested and sentenced to seven years in prison in 2017 for his role in the emissions scandal.

We'd rather put that money aside and spend it on our own exclusive product presentations. Audi spokesperson

Audi, a VW subsidiary, followed suit, cutting back representation in Detroit without a single senior manager in attendance. An Audi spokesperson said the carmaker is focusing on its promotional budget: “We’d rather put that money aside and spend it on our own exclusive product presentations.” A spokesperson for Porsche, also owned by VW, explained their absence at the auto show by saying two other trade fairs in New York and Los Angeles are more important to the company and their customers.

Yet Mr. Dudenhöffer suggests another reason for the Detroit auto show's decline in attendance: “The American car market is becoming less significant.” The Chinese market is now where 30 percent of the world’s new cars are sold, with the US representing just 20 percent of the market, down from 35 percent in 2000. Mr. Buss says companies now display new car models in different settings around the world, including China. “The presentation models are simply more widely distributed,” he says.

Things may not improve for the United States – most economic experts foresee economic stagnation there in 2018; in any case, the US will almost certainly not overtake China for growth.

Katharina Kort is a Handelsblatt reporter based in New York. Stefan Menzel writes about the auto industry focusing on Volkswagen. To contact the authors: [email protected], [email protected]