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Detroit Auto Show Preview: U.S. Carmakers Set To Fight Challenge by Mercedes, BMW and Audi

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Mercedes, BMW and Audi will lead the European assault on the U.S. market with new SUVs, sports sedans and coupes at Detroit’s North American International Auto Show (NAIAS), but domestic manufacturers are starting to crank up some effective retaliation.

The Europeans, fresh from a strong 2014, will be helped this year by the fall in the value of the euro against the dollar, and will share with U.S. manufacturers the boost to sales at the gas-guzzling end of the market from the surprising and deep fall in the price of oil.

New vehicles from the upmarket Germans include a sporty SUV from Mercedes-Benz , the GLE Coupe, a big new SUV from Audi, the Q7, and a revamped BMW 6-series range. The 6-series comprises a two-door coupe, a convertible and a four-door Gran Coupe, making their world debut. Porsche is holding its cards close to its chest, only saying it will launch two versions of existing models. FCA’s Alfa Romeo will be marking its return to the U.S. market after nearly 20 years absence with the little 4C Spider. Alfa Romeo, the storied sports-car maker now emerging from a dormant period, won’t emerge as a strong player in the U.S. probably for a couple of years yet.

U.S. manufacturers though are getting ready to rumble, according to Kelley Blue Book senior analyst Karl Brauer.

“The high-end, high-performance European cars are poised to succeed, but so are the largest SUVs and trucks produced by the domestic manufacturers, and those have been growing faster than the luxury brands in the past year, though the luxury brands have grown too. Audi, BMW, Mercedes-Benz and Porsche should continue to grow in 2015, but probably not as quickly as brands like (FCA’s) Jeep and Ram or models like the (Ford) F-150, Ram 1500, ( Chevrolet ) Silverado, Suburban, (Jeep) Cherokee and other trucks and SUVs,” Brauer said.

New models from domestic producers include hot versions of the Ford Mustang and Ford GT, and GM’s Cadillac CTS-V. GM’s Buick will launch the Cascada, borrowed from the European Opel division.

The European threat will be helped by the 13 per cent rise in the dollar against the euro since mid-year, which means Americans need fewer dollars to buy these cars. But the yen has fallen even more, 15 per cent over the same timescale, so expect an increasing Japanese threat, especially from manufacturers still making large proportions of their vehicles at home. Japanese content ranges from 85 per cent for Mazda down to Nissan and Toyota’s 52 per cent and 48 per cent, while Honda is the lowest with 22 per cent.

Not all the Europeans are flying high.

Volkswagen, which owns Audi and Porsche, as well as brands like Bentley and Lamborghini, can’t seem to fire up its own name brand, and U.S. sales fell in 2014 by 10 per cent to 366,970. Analysts blame a shortage of new models for VW’s lack of success, and it is expected to unveil a new concept SUV at the NAIAS, a five-seater to join the already announced 7-seater scheduled to go on sale in 2016.  VW has to go some if it is to get anywhere near its target of 800,000 cars a year in North America by 2018.

Brauer sees some hope for VW.

“Volkswagen will probably be slightly up in 2015, mostly because it had such a bad 2014. But the all-new Golf is doing very well and that should bring the brand up a bit. The new SUV is too far away to help VW in 2015, but it will help in 2016. Yet even with the SUV coming to the market in the next 12-15 months, it is hard to imagine VW hitting its 2018 goal,” Brauer said.

Most experts expect the U.S market to grow again in 2015. IHS Automotive sees sales of 16.9 million this year, up from 16.5 million in 2014. Anna-Marie Baisden, auto analyst at British based Business Monitor International, sees 17 million this year. GM CEO Mary Barra expects 2015 sales of between 16.5 million to 17 million, in other words flat to up about three per cent.

    NAIAS press review days are January 12 and January 13. The show is open to the public at the COBO Center from January 17 through January 25.