Detroit's New Push for Better Interiors

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Justification for Premium Prices

Upgrading interiors and technology can also have a positive impact on the bottom line. Features that were once high-priced options, such as satellite radio and Bluetooth technology, are becoming increasingly common as standard equipment, thus letting the manufacturers charge a correspondingly higher sticker price.

To save development costs, all automakers are spinning off more variants of their basic models, such as the Mini Cooper Clubman from the Mini Cooper and the BMW X6 from the X5—both of which were at the Detroit Auto Show. The variants share underpinnings, including engines, transmissions, and suspensions, while the automakers differentiate them as much as possible with different interiors and exterior styling.

Much of the reason for this sudden push to improve interiors has to do with the rising price of gasoline that has hurt Detroit's traditional lineup of big-engined cars, trucks, and SUVs. As they make the transition to building smaller cars, the Detroit 3 realize, since muscle isn't as alluring as it once was, they need to offer other features to convince drivers that small cars are not only desirable but also worth a premium price.

American Demands

This is something automakers have always known in more gas-conscious markets such as Europe—even the European subsidiaries of Ford and GM. But they have been reluctant to bring that expertise to the U.S. until now. And Europeans are willing to pay more for snappy design.

Fritz Henderson, GM's vice-chairman and CFO, says GM's Opel unit offers its top-selling Astra model in Europe for €18,000 to €20,000, or close to $30,000 at present exchange rates. "How many $30,000 Cobalts do you see?" he says, referring to a comparably sized compact with a nondescript interior that sells in the U.S. for $15,000 to $20,000.

He adds that, if anything, U.S. customers are likely to be more, not less, demanding in other areas including roominess and performance, while still insisting on better gas mileage.

Safe Haven

But nicer interiors aren't simply cosmetic improvements. Many of the new designs incorporate safety features that were unheard of 20 or 30 years ago.

"People don't really recognize that change has been massive, massive, massive, massive, massive in their likelihood [of surviving] a crash," says Chris Bangle, an American expatriate and BMW Group's chief of design. For instance, today's BMW 3 Series has seat belts with automatic pretensioners; front, side, and head air bags; head restraints; antilock brakes; traction control and yaw control; while the 1970s 2002 models had little more than a padded dashboard and seat belts.

"What has happened in interiors has been so dramatic, especially the amount of stuff that's inside an instrument panel," like air bags, says Bangle. He adds that U.S. crash-test safety standards assume occupants aren't wearing seat belts, which makes meeting the standards that much tougher.

Plenty of today's other standard interior features were once pricey options, if they were available at all. Leather seats, for example, were once found only in the most expensive cars; now they're available for practically any model. The same can be said of climate control, radios, CD players, even cupholders.

The New Frontier?

Despite this new focus on interiors, don't expect the industry to start neglecting exteriors. After all, exteriors are still what we see first, and first impressions are critical.

"I started out 27 years ago at Opel in interiors, and we were all convinced back then that interiors were the New Frontier," Bangle says. "Maybe one of these days we're going to be right."

Check out the BusinessWeek.com slide show for a roundup of the most exciting new interior designs shown at this year's Detroit Auto Show.

Henry is a reporter covering the automotive industry and automotive trends in BusinessWeek's New York office.