Wouldn't you guys just love to know how they came to these conclusions? Are they assuming that Japanese automakers will allow thier current fuel economy to stagnate?

Don't get me wrong, I totally agree with them. By increasing fuel economy accross their line, domestic automakers could reclaim some of their customer base.

Personally, I would love to see Ford become the auto maker that focuses on fuel efficient (NADI Diesels please), safe (four point safety harness), and functional (hatchbacks, crossovers, etc.) vehicles.

Yeah the Japanese automaker undisclosed assumptions must be bogus. What about a study on gas priced in 2010 above current levels, e.g. $4-$5/gallon which is more along the trendline than a short-term drop to $2 or $2.30/gallon?

As soon as the Democrats take back power in November everyone will figure that all the oil price spikes are over since they were caused by Republicans anyway. By mid-November SUV and truck sales will skyrocket as gas prices fall below $2/gal.

In Europe, fleet average fuel economy has improved from 186 to 160 g CO2/km (the metric allows gasoline and diesel consumption to be combined into a single number) over the past decade, even though consumer demand for sportier, more comfortable cars has gone hand-in-hand with tighter regs on safety, noise and emissions.

This is not to sing the praises of the European auto industry - their voluntary target of 140 g CO2/km by MY 2008 exists only to deflect/postpone mandatory fuel economy regs by the EU. However, it does show that technologically, it IS possible to deliver relatively fuel-efficient vehicles that are still fun to drive and get customers to part with a boatload of hard-earned moolah. Note that cars cost a lot more in Europe, in part due to high VAT, than they do in the US even though average disposable household income is lower.

However, profits for most local carmakers are still anaemic for much the same reason the Big Three are in a financial funk: structural overcapacity in the industry and unions/politicians that make it incredibly hard to take long overdue corrective action.

Ergo: investing in the development new, attractive models featuring state-of-the-art technology is a good idea. Focussing on fuel economy specifically is a great idea, for many reasons. But neither will eliminate the problem of excessive payrolls and the idle plant associated with them.

It is too late for GM and Ford. The perception that they just produce low quality gas guzzlers will take years to turn around. By that time, they will both be bankrupt or will have outsourced virtually their entire production overseas.

Looks like automotive experts more and more come to conclusion that major problem of Ford and GM is ever decreasing sales of big SUV and pick-ups due to high gasoline prices. This is very dangerous delusion. Japanese automakers already have high production capacity of SUV and trucks in North America, and capacity of Korean and European companies is increasing too. They offer way higher level of technical sophistication, reliability, and long-lasting value then domestic manufacturers. If sales of big vehicles increase, it will be Japanese, Korean, and European companies which will increase sales.

Second, looks like Big Three concluded that big SUV is part of American dream, and when more fuel efficient models will be offered, gasoline prices dropped, alternative fuels will kick-in, or simple Americans will become richer enough to oversee high fuel prices, everybody will own as big SUV as his budget will allow. This is big mistake. SUV is a pig to drive, and using it to everyday commute is like dancing in downhill skiing boots. Initial craze about big vehicles could fade, and SUV and pick-up truck will return to where they belong: vocational towing and cargo hauling.

I believe that the only way for Ford and GM to revitalize themselves is to improve automotive technology in all vehicle segments. Transition to 100% rear disk brakes, alloy wheels, and stainless steel exhaust would be nice and in fact only marginally more expensive for OEM, yet could very quickly boost sales. Better fuel efficiency will follow more technological sophistication automatically.

Andrey, do you realy think the vast majority of car buyers know or care what their exhaust is made from?

Merging with GM would be stupid. They both have the same problems.
Ford and GM both have a chance to become profitable, but they need to act fast.
Perhaps merging with someone who doesn't have a contract with the UAW would be a wise move.

Tim:
You are right. Import car manufacturers are playing same shameless game as Big Three. They retain outdated technology on entry and middle-class models to push customers to buy bigger, more technologically sophisticated, and way more profitable for manufacturers models. Honda at least offers the option of rear disk brakes – but for huge increase in price.

And yes, EPA standard pushed automotive manufacturers to make downpipe and cat from rust resistant materials. Cat back and muffler are still rusting out in 5-7 years, and any midclass car have to change it at least once in lifetime. Price for changing is roughly 5 times higher then price premium for original rust resistant connection pipe/muffler. And since most of exhaust job is done not on dealerships, I really do not understand what holds car manufacturers to eliminate this pain in the neck for car owners.

The Big Three leaders got greedy! They continued to push gas hogs,ie, Ford Explorer, Suburban, C10 pickups with big motors, etc. and now they're paying the price!

Ron Graham
Constitution Party
Jackson, Mich.

"Where are the Auto Ex's Heads?" Good question.
Apparently they're not the ones who spent $1Billion in tax payer money
in the PNGV program to delevlope an 80 mpg car.

There was some speculation that they are abandoning their US operations that are loaded with pension and medical liabilities. They are global companies and will make money in China and elsewhere. The total buyout offers at both companies may point in that direction.

Harvey, Honda and Toyota don't have to pay out huge sums to retired workers due to badly worked out contracts with the UAW, that's why they can make a profit on smaller cars made in the USA.