For car industry, California has already seceded

The Los Angeles Auto Show, which opens this week, reflects the peculiarities of the state's market.

By TheStreet Staff Nov 27, 2012 1:54PM

thestreet LOGODowntown Los Angeles, California copyright CPA, Flickr, Getty ImagesBy Ted Reed

 

In terms of the automotive market, California long ago seceded from the rest of the country.

 

The Los Angeles Auto Show, the trade fair for the state where 11% of all U.S. retail auto sales occur, opens for the media on Wednesday and for the public on Friday. The show provides a look at the industry from California's viewpoint. Some 50 vehicles will make their global or North American debuts. The emphasis will be on green cars, imports and luxury cars.

 

California accounts for a third of all electric vehicles and a quarter of all hybrid vehicles sold in the U.S., according to Edmunds.com. It is among the few states where imports dominate. And its abundance of high-wealth households creates a strong market for luxury vehicles.

 

The top introductions at the show will be the new Honda (HMC) Civic and the Toyota (TM) RAV-4. For Detroit, the principal event will be GM's (GM) introduction of the new Chevrolet Spark electric vehicle. Ford (F) will show the new Fiesta, first shown at the Paris Motor Show in September.

 

For the first nine months of 2012, the list of the top 10 new car registrations in the Los Angeles area -- which accounts for more than half of California retail auto sales -- didn't include a single Detroit vehicle, according to Edmunds.com. And the top 15 registrations included only one Detroit vehicle, the number 15 F-Series pickup. The top 20 includes only one other Detroit vehicle, the Chevrolet Silverado, at No. 20. The Chevrolet Cruze was No. 28.

 

By contrast, the top 10 U.S. vehicles for the first 10 months are led by the F-Series and Silverado, with the Dodge Ram at No. 8, Ford Escape at 10, Focus at 11, and Chevrolet Cruze at 13. California has "an import car bias," said Edmunds.com analyst Jessica Caldwell, on a recent conference call with auto reporters.

 

As far as electric vehicles and hybrids, "California is big in the green market," Caldwell said. "If there is a green movement, it usually starts in California."

 

California believes it should play an active role in promoting green technology. For more than a decade, it has required automakers to sell a number of vehicles that produce little or no tailpipe exhaust. This regulation encourages electric vehicles, even if they lose money. For instance, the auto show introductions will include Chrysler's first battery-powered car, the Fiat 500e, which will cost the company $8,000 to $9,000 per sale, CEO Sergio Marchionne has estimated. "There will be an electric car in the portfolio of every domestic automaker," Caldwell said.

 

For the moment, however, the Honda Civic is at center stage. It is the No. 1 vehicle in California, accounting for 4.4% of the state's retail, and in Los Angeles, where it accounts for 4.5%.

 

Honda is refreshing the vehicle just two years after it unveiled the 2012 model. "The 2012 was criticized," said Jefferies analyst Peter Nesvold, on the Jefferies/Edmunds conference call. "It's critical that Honda keep this product fresh and highly relevant."

 

Among luxury vehicles, the focus is on the world debut of the Acura RLX. The debut is important for Acura, Caldwell said, because the company "has had a series of cars that have not done so well." Additionally, Porsche will debut its 2014 Cayman sports car. Also, BMW will unveil the i8 concept roadster, an open-top two-seater, which will get 78 miles per gallon with extremely low emissions.

 

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6Comments
Nov 27, 2012 3:30PM
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From the perspective of this article, California should have explored secession  instead of Texas.
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We should give California back to Mexico so the Mexicans can drill for oil off the coast to increase their exports and thus their standard of living.  The illegal immigrants are coming in anyway, so they should just be moving from one Mexican state to another.
Nov 27, 2012 5:02PM
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After the Big Earthquake, if America is lucky enough...California will be severed and float away.  You Callies left the East and the Midwest and now you buy everything foreign.  Shame on you!  (public post).  There should be a California tax to re-employ the rest of the country.  Idiots.
Nov 28, 2012 2:00PM
avatar
I live here, it's true.  People living here who can afford new cars tend to drive foreign. 

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