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After the meltdown, car companies ready to compete again

The 2013 Cadillac XTS, one of many new models unveiled at the 2011 LA Auto Show in Los Angeles, California,

LUCY NICHOLSON/Lucy Nicholson/Reuters

The panting and the palaver over all things "green" has apparently died down.

Now, if we are to believe what we saw at this year's Los Angeles Auto Show, we've arrived at sober second thought. The reality of a car business is that it's ready to compete on all fronts with real new models that sell in big numbers for reasonable prices while still generating decent profits.

Whew! All that's left now for auto companies around the world is for the politicians and the financial sector to find common ground with reality and get this economy humming again. That's the big takeaway from two days milling and mingling and poking and prodding leaders of the auto industry at the last big show of 2011.

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Anyone with any sense can see that this car business has resurrected itself from the mire of the 2008 financial meltdown that sent two of Detroit's auto companies into bankruptcy and left the third teetering on a knife's edge. There was a palpable optimism on the show floor in L.A., in fact. It seems borne of a conviction that after the last three years, car companies know crisis management – no, they've mastered crisis management.

General Motors, if you hadn't noticed, is making billions now. So is Ford. Chrysler is more profitable than its saviour, Fiat of Italy, and recently announced a $500-million (U.S.) upgrade to the Toledo, Ohio, plant where Jeeps are made.

Reid Bigland, the Chrysler Canada CEO who also runs the company's sales operation in the United States – and I suppose spending every other Tuesday afternoon as CEO of the Dodge brand – says it's hard to complain about working hard when the hardest-working person in the company is Sergio Marchionne, CEO of Chrysler and Fiat.

"I [recently]came back from meetings in Italy and hadn't slept in, oh, 40 hours, and I just – I didn't exactly throw up on my desk (from exhaustion) but I told my assistant I had to go home and get some sleep. But right then Sergio was on a plane to Turkey or something. He just never stops," said a palpably enthusiastic Bigland, who by the way may be the fittest executive in the car industry, period. And he's struggling to keep up with his boss.

Mark Reuss, who is head of General Motors' North American operations, stood in front of Cadillac's new XTS sedan, bursting with as much fire and energy as I've seen from any GM executive in 20 years. The discussions around GM, he said, are about products and profits and growth, not rationalizing and cost-cutting and downsizing and paying back taxpayer bailout money.

He said GM CEO Dan Akerson has made it clear that a $6.3-billion first-half profit, GM's best in at least 20 years, isn't good enough. Chief financial officer Dan Ammann, we've learned from Bloomberg, is learning how to drive race cars in between eyeballing the company's 6 per cent margins – and not liking them. Morgan Stanley Investment Banking came up with the 6 per cent using earnings before interest and taxes and they are the basis on which GM is touting its goal of beating Ford and VW's 7 per cent margins.

GM, in case you hadn't noticed, is bounding ahead with product programs like the EXT, but at the same time the company is racing to consolidate the family of engine and vehicle platforms used to make cars. Is it fun now after three brutal years? I asked Reuss.

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This wry and no-nonsense engineer let himself have a thin smile before replying: "It's a lot better than before."

Better because GM has lots of new models coming and the latest ones are proving to be successful. The Chevrolet Cruze compact is a flat-out hit, for instance. Heck, GM's Chevrolet brand as a whole will sell 4.5 million vehicles globally this year. You read that right: 4.5 million.

Across the show floor, auto company after auto company had something interesting and practical and stylish and profitable to show. The fantasy of electric cars for the masses – Honda plans to sell just 1,000 Fit EVs – was pushed to the side, to a place deserving of the minuscule market share electric vehicles will own for the next two decades. Instead, car companies from Ford to Mazda and almost everyone in between talked up aerodynamic designs, lightweight materials and fuel-efficient engines with no compromises in performance.

In short, the L.A. auto show felt like, well, an auto show. Optimism and confidence seemed to have replaced the doom and gloom of the last three years all around the world. Car shoppers are going to see quite the barrage of new models coming to showrooms in the next few weeks and months. The industry seems very much to have its house in order. It's mainly profitable and lean, yet its new products are state-of-the-art technologically and wonderfully stylish.

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About the Author
Senior writer, Globe Drive

In 25 years of covering the auto industry, Jeremy Cato has won more than two-dozen awards, including three times being named automotive journalist of the year. Jeremy was born in Montreal and grew up in the San Francisco Bay Area. More

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