Ford’s survival may depend on the U.S. success of the European-designed Focus and Fiesta. An embattled GM agrees with FoMoCo's "world car" strategy, talking up its "global platforms." Meanwhile, Honda and Toyota’s dominant Camcordias were designed predominantly with the North American market in mind. Does success in the brutally competitive American market demand specifically tailored designs? Or are “world cars” the salvation to Detroit’s passenger car woes?

Detroit has been vacillating on this subject since the fifties, when they imported Opels and Euro-Fords. After 1960, these “captive imports” took a back seat to home-grown compacts, on the assumption that the hometown team knew better what Americans wanted: lazy six-cylinders and soft suspensions.

When these “compacts” became obese in the sixties, GM resumed importing the tin(n)y Kadett. By 1969, the Opel was the number two selling import. Turns out Americans really did like genuine Europeans– even if they were sold at the Buick dealer. So in its usual hubris, Detroit decided it could “leapfrog” the imports. Hence the Chevy Vega and Ford Pinto.

Suffice it to say, that didn’t work out so well.  Meanwhile, the Japanese invasion became a tsunami. GM’s GEO resumed importing captives from Isuzu, Suzuki, Toyota and Daewoo, with varying degrees of success. Ford’s European imports were a mixed bag. The “baby Mustang” Capri and the little front wheel-drive hatch Fiesta were genuine hits (for a while). But FoMoCo struck out with the [Bob Lutz-championed] Merkur-badged XR4ti and Scorpio.

Detroit’s big leap into “world cars” began in the late seventies, in response to expensive gas and inexpensive competition. First up: Chrysler’s 1978 Omni/Horizon twins. Designed in Europe, the “Americanized” Omnirizon (a.k.a Simca) was a success. But it didn’t receive the continuous development that the Japanese and Europeans lavished on their small cars. The models finally died in 1990, essentially unchanged from their original incarnation.

Ford’s global 1981 Escort was heavily (and dubiously) touted as the first “world car.” In its home market, the European Escort was a decent Golf-fighter. The U.S. version was flawed in the usual Detroit way: soft suspension, lousy gear ratios and cheap, ugly Americanized interiors.

GM committed its version of the crime on an even grander scale with its highly-promoted world car J-body of 1981. Known (and then despised) as the Cavalier in these Land of the Free, GM of Europe successfully adapted the same basic car as the Opel/Vauxhall Ascona.

These three world cars demonstrated that The Big Three were perfectly capable of designing world cars that could compete with Europe’s home grown best (e.g. the VW Golf and Passat). But it was their “Americanization”– especially reliability issues– that doomed them to declining market shares.

Even VW made the same deadly miscalculations. The Rabbit arrived in the US in 1975 as a totally unadulterated crisp German import. In 1978, the falling dollar inspired VW to open the States’ first transplant factory (sound familiar?) to build a U.S. version. 

Former GM exec James McLernon was hired to meet the 200k annual sales goal. His solution: “Malibuize” the Rabbit with cheaper and softer plush seats, softer suspension, dorky full wheel covers and (!) a smaller 1.4-liter engine. The result was largely a disaster, at least from the typical VW buyer’s point of view. The plant closed in 1989.

Meanwhile, the Japanese were happily selling their “world cars” in the U.S. It helped that seventies Japanese designs were closer to American tastes (think vinyl roofs, heavy chrome grilles and weird C-pillars). But Toyondissan’s ever-growing reputation for reliable, economical transportation transcended taste. That alone is a huge lesson. 

Ford essentially repeated its Escort mistake with the Mondeo/Contour/Mystique mid-size world-car. Designed jointly with the Europeans, the American version was flawed by being too compact, not to mention the usual reliability issues.

By the mid nineties, the Honda Accord and Toyota Camry were split from their home-market versions, due to the Japanese tax on vehicle width. But the “American” versions were– and are– also sold globally and in Japan, under different names.

The old rationale Detroit used for “Americanizing” their world cars or global platforms is now essentially dead. Taste in design was once provincial; it’s now global. We all shop at IKEA. Yes, some parts of the world prefer trunks while others hatchbacks. VW solved that problem decades ago with the Golf/Jetta twins. And European cars have grown to world standards (the new Mondeo is huge).

Ford and GM’s adoption of true world cars is economically obvious and long overdue. But their success hinges entirely on the exact same criteria that have always been the life-or-death determinants in this country: design, utility, price/value relationship, reliability, marketing and dealer support. That is, versus the competition. Which is… brutal.

Things are bad for Chrysler, Ford and GM. The Big 2.8 are burning precious cash, shedding valuable market share, choking on unwanted trucks, attempting to nurture (or excise) damaged brands and outmoded models, and struggling to bring relevant products to market. Bankruptcy looms large. And yet, there’s a silver lining to the recent, calamitous downturn in the U.S. new car market. But before we reveal the sliver of hope, let’s check in with the main engines of their destruction: Honda, Nissan and Toyota…

For Toyota, whose annual profits are more than twice GM’s entire market capitalization, the American consumer’s switch from light trucks to lighter cars is extremely annoying.

After investing some $2b in a brand new pickup truck plant in Texas, ToMoCo had to slash prices to the bone to move the metal. Now that their sales target is a cruel joke, they’ve backed off on discounting. Sales are sinking fast. Although Toyota’s still selling over 100k Tundras per year (at current rates), the plant was designed to build more than twice that amount.

As ToMoCo shuffles and “right sizes” production, the prescient addition of Camry production in Subaru’s space is paying off in spades. The “extra” capacity has allowed an increase in U.S. rental sales. Even so, the increase in total sales means the fleet percentage is well under 20 percent for the Camry/Corolla, which bodes well for maintaining the vehicles’ re-sale value (historically what kills fleet-queens). 

In this not-so-brave new market, Toyota’s biggest obstacle to further growth is structural; they can’t build popular models fast enough. The vehicle that best exemplifies gas-sipping, the Toyota Prius, can’t be constructed in anything other than a purpose-built (or highly modified) assembly plant. Equally important, battery suppliers must expand to meet the demand. Back when Toyota announced a target of over 200k Priora per year, there was talk of them being too ambitious. Turns out, they weren’t ambitious enough.

If the pickup truck debacle dented Toyota, it gutted Nissan. Even matching mad pricing only moved 80k Titans last year. With the ’08 numbers plunging off a cliff, Nissan is looking to get out of big-truck building (sourcing the Ram, if Chrysler’s still around). Meanwhile, the company’s juggling output to keep their factories busy. This is the first major market downturn since Nissan merger with Renault; it’s time to find out if they can thrive in adversity. 

The biggest issue Nissan faces in the U.S.: a lack of “first choice” vehicles. The Quest is off most minivan buyers’ radar. As good as they are, the Altima/Versa are on the tip of no one’s tongue. The Murano, one of Nissan’s only “stand out” vehicles, is slumping badly. The model’s thirst, extra size (without a compensatory third row) and cannibalistic smaller sib (the Rogue) have done it in.

So, while a truck-liberated Nissan will have the production space to grow, there’s not much hope for growth in the near future. 

Right now, Honda is the only major manufacturer increasing U.S. sales over last year– by about five percent. Offering a small-car heavy line-up has helped their bottom line. But so did limiting large vehicle production.

Last year, Honda changed over one line from making Pilot/sized vehicles to Civics. That left them with a natural cap of around 200k Pilots, Ridgelines and MDXs, and a similar limit on Odysseys. If the Odyssey outsells the Dodge Caravan this year, it will be a result of the Caravan falling (which it has been), not increases on Honda’s side.

All this shuffling freed production space to increase the sales of Civics, Fits and CRVs. The Accord is selling well enough, but there is a natural “cap” of about 450K. Given strong TL and Inspire (JDM US-style Accord) sales, they may not reach that. The limit on Civic sales are much higher; half a million would not be a shock. 

Even better, Honda is getting ready to open a new assembly plant in Indiana. While it has been listed to build Civics, it may directly or indirectly allow higher Fit sales. Even with a new plant online, Honda’s U.S. sales cannot get much above two million units per year without even more investment and time.

The good thing about this market-share-loss is that it’s mostly relative. Chrysler, Ford and GM have too many factories for what they sell, but they are also the only companies that could fill the gap if/when one of them shuts down. 

And there’s your silver lining. Assuming Chrysler's the first to go, assuming the American market doesn’t contract even more violently than at present, Ford and GM will be uniquely positioned to increase production to take-up the sales slack; which could be measured in hundreds of thousands. No one else has the necessary plant capacity. Last man standing. Dead cat bounce. Silver lining. Take your pick.

Everyone in the car biz knows that June was a catastrophic month for the U.S. new car market. Total sales dropped by 18.3 percent. The big change this time 'round: it wasn't just light trucks that took it on the chin. Car sales received some body blows, as well. If you're an auto industry exec [still] living in denial, it's best to stop here. If not, read 'em and weep. [NB: As per TTAC policy, sales numbers not adjusted for "sales days."] 

Family Cars

As SUV refugees seek car-shaped shelter, there were some big winners in June. Sales of the Chevy Malibu* rose by an astounding 73.4 percent over last June, up 31.2 percent year to date (YTD). Honda's Accord chalked-up a 37.3 percent gain for the month, up 12.9 percent YTD. Ford's Fusion finished the month 18.4 percent ahead of last June, up 11.7 percent YTD. Meanwhile… Chrysler's once-proud full-size sedan continues to tank; 300 sales dropped 61.6 percent from last June, down 36.5 percent YTD. And surprise: the Toyota Camry took a hard hit, dipping 10.8 percent below last June, posting a 0.3 percent loss for the year.  

Compacts

The Chevy Cobalt was another winner for GM, up 21.6 percent for the month and 18.5 percent YTD.  The Dodge Caliber was another loser for Chrysler, down 43.6 percent for the month and down 0.5 percent YTD. Worryingly, Ford's Focus dropped 5.5 percent in June. But it's still 27.6 percent ahead of last year. The Toyota Corolla** continues strong sales, up 15.6 percent on month. Yet it still trails last year by 3.8 percent. Honda's Civic* finished the month 9.5 percent ahead of last June and 17.9 percent ahead of last year. The Sentra didn't do as well for Nissan.  It was down nine percent on month, struggling to finish the first half of the year up 3.5 percent.

Subcompacts

Honda's fuel-efficient Fit was a big winner. Sales leaped 78.2 percent ahead of last June, finishing the semester up 67.4 percent. Nissan's Versa finished the month up 17.4 percent for June and 20.7 percent ahead YTD. GM's entry in this genre ran out gas. Sales of their Korean econobox Aveo were down 19.7 percent; down 1.7 percent YTD. Toyota's Yaris also lost ground, ending June down 7.5 percent; though staying 39 percent ahead YTD. 

Trucks

Brace yourself. Chevy's Silverado* sales tumbled by 23.7 percent on the month, 25.6 percent YTD. Dodge's Ram fell 48.1 percent in June, down 30.4 percent for the first six months.  Ford's F-Series sales dropped by 40.5 percent from June '07, ending the first two quarters down 22.7 percent. The Toyota Tundra , which had posted sales gains for the first quarter, finished the second quarter down 52.9 percent from last June; down 7.6 percent YTD. The Texas-built Tundra may soon drop below 2006's sales line.

Truck-Based SUVs

Chevy's Tahoe* showed a surprising gain from May (fleet sales?), adding about 2.5k units to the tally. finishing the month "just" 9.8 percent below last June. However, Tahoe sales are still down 26.6 percent YTD. The Dodge Durango continued its descent into oblivion, dropping a massive  67.3 percent in June, down 48.4 percent on the year.  The Ford Explorer showed an equally abysmal June, losing 52 percent from last June and 33.2 percent from last year.  Toyota's Sequoia continued its death-defying growth, surging by 25.1 percent in June, showing a 28.8 percent gain YTD.

Crossovers

The crossover bubble's burst. Thanks to a slow start last year, GMC's Acadia is up 8.5 percent on the year. But June sales fell off a cliff, down 40.1 percent from last June. Ford's Edge also dropped in June, this time by 19.9 percent. Robust sales earlier this year puts it 16.9 percent ahead of last year– for now. Toyota's woes continued, with Highlander* sales down 38.9 percent in June and 5.2 percent compared to 2007. The new Honda Pilot wasn't exactly pulling them in either; sales were down 29.8 percent for the month and 16.7 percent YTD.

Prius

Toyota's Prius dropped for the second month in a row. Due to short supplies and high demand worldwide, stateside sales are down 33.7 percent from last June. Sales drops in May and June pulled its year-to-date sales to 3.2 percent below last year. Toyota plans to produce 450k Priora in 2008; they've already sold 91.4k of them in North America alone so far this year. So look for their sales numbers to remain relatively low, in spite of growing demand.

By Manufacturer

GM's Hail Mary end-of-month 0% financing deal helped stave off a total rout. The General managed to finish June a "mere" 18.2 percent below last June's pace, down 16.3 percent for the year. Toyota's performance was June's shocker. ToMoCo ended the month 21.4 percent below June '07 (well below GM's dismal performance), dropping 6.8 percent on the year. Meanwhile, Chrysler sales fell by a staggering 35.9 percent for the month. ChryCo's trailing last year's sales by 22 percent. Ford was down 29.5 percent for June, 14.5 percent YTD. Honda managed to finish the month relatively unscathed, showing a 1.1 percent increase, with a 4.1 percent increase year to date.

Looking Ahead

July's misery may well eclipse June's. GM ran their 0% financing deal for the first week of the month, so they've up you-know-where without a you-know-what (small car?). Ford, Chrysler and Toyota are all offering incentives of varying sizes, particularly on the trucks and SUVs nobody wants. At what point will the deals become sweet enough to overcome the fuel bill? The sales numbers show we aren't there yet. As fuel prices climb, or even just hold steady, as the Fed declares that the economic gloom will extend well into '09, it's clear we're still a long way from the bottom of this combination of a violent contraction and a wholesale shift in product preference.

*Includes hybrids
** Includes Matrix

Click here for June's market share numbers 

In the nineteen-eighties, Ford CEO Donald E. Petersen's recipe to save Ford from near-bankruptcy was "higher quality products… emphasizing smaller, more efficient cars." It worked, propelling Ford past Chevrolet to world-record profits. Current CEO Allan Mulally is banking on essentially the same ingredients: de-emphasize trucks and rejuvenate the car palette with global platforms largely designed in Europe. Ford's future, perhaps its very existence, is riding on it. Is the recipe still golden?

Ford's strategy is essentially defensive, conservative and obvious. The big truck/SUV paradigm that propelled Ford to outsized profits in the nineties is broken. Ford neglected its car lines, and never bothered to learn how to produce small cars profitably. It became distracted with Jaguar and the ill-fated Premium Auto Group (PAG), at the expense of Lincoln. Quality gains unraveled with disastrous transmission and head gasket problems. And the foresighted "world car" platform plans, beginning with the 1980 Escort, were unraveled by corporate fiefdoms running amok. The result was a Balkanization of car platforms.

Centralizing development and unifying Ford's global car line-up is a necessary and essential move fordward, but it's hardly a "Bold Move." There's no guarantee that the cars will be hits.

Ford's handsome new Mondeo is already in trouble in Europe, selling at lower volumes than its predecessor. Every time Ford (and Opel) attempts to go upscale in Europe, they run into a glass ceiling, where the premium brands aggressively shove downwards with their own smaller models. Ford's global Focus and Fiesta are attractive and competitive products. But expectations for their success stateside may be inflated. In the Euro-zone, the Astra is a credible competitor to the Euro-Focus and VW Golf. Setting aside questions about profitability, the imported Astra's hardly setting the U.S. market on fire. 

The same forces shrinking Ford's market share in Europe are increasingly at work here. Whereas in the eighties Mercedes and BMW were decidedly upscale, they too are pushing downwards, along with Audi, Lexus and Infiniti. And that's just the premium brands putting on the squeeze from above, keeping potential profit margins for Ford-brand vehicles in the thin end of the wedge.

In terms of direct competition, 1981 looks positively idyllic compared to 2008. In the eighties, the Japanese were limiting imports voluntarily. The Koreans were where the Chinese are today: just getting warmed-up for the attack on the U.S. market.

Ford has no realistic hope of recreating the 20+ percent share of the passenger car market in the eighties. Those days are gone, forever. The volume-brand market is fragmenting dramatically. The advantage accumulated by Toyota and Honda is staggering. Ironically, their top-selling Camry and Accord are not global cars, but targeted US models. The tables have turned, and Ford is taking on the role of an "import.. But the solidly entrenched transplants are not going down easily like Ford and GM once did.

The best Ford can hope for is to hang on to its current share, trying desperately to offset its shrinking truck and SUV sales. And the thin profits from smaller cars are going to be a big let-down from the $10+k per vehicle Ford once minted with its trucks and SUV's.

Ford bet the family farm on the original Taurus, and won big. But there's no repeating that gamble. The mid-size car market is mature. The only gamble in that segment was made by Toyota with its Prius, and it paid off.

In 2005, Billy Ford promised to build 250k hybrids per year by the end of this decade. A year later, he recanted. Meanwhile, Toyota is closing in on a million hybrids per year. Ford builds 25k hybrid Escape/Mariners annually, keeping the volume low, below market demand, because it can't make any real money on them. Ford backed away from its bold hybrid gamble. It has the technology, but failed to crank-up production and wring out the costs for eventual profits, a la Toyota. A distinctive Focus-based hybrid sedan built in quantity could have been a genuine Prius competitor.

Yes, the hybrid Fusion is coming, but it's too little, too late. Ford is not really committed to volume hybrids, unwilling to spend its dwindling cash reserves on chasing difficult profits. And except for the obligatory show-off plug-in version of the Escape, Ford has absolutely nothing in the hopper regarding electric cars, having sold off its Think EV division years ago.

If oil prices settle down a bit, Ford's strategy may buy them some time. But if Peak Oil really is lurking around that bend in the road, and/or there is a substantial shift in consumer demand for EV's and hybrids, Ford is screwed. Every other major global manufacturer (Chrysler excepted) has serious hybrid, EV and battery development projects in high gear.

In the eighties, Ford made some genuine bold moves, faced less intense competition, and benefited from falling oil prices. History doesn't necessarily repeat itself. 

Oil prices have just hit record highs. Talk of recession is in the air. Ford’s line-up of bloated, heavy vehicles is piling-up like cord-wood on the dealer’s lots. The only car selling: its “Americanized” global compact. Ford stock is in the toilet and bankruptcy rumors are swirling. The top exec hired a year earlier is intelligent, unassuming and straight-talking. He commits Ford to building “higher quality products with stronger customer appeal… emphasizing smaller, more efficient cars.” Ford in 2008? No, it’s 1981.

Like current Ford CEO Allan Mulally, Donald E. Petersen was an atypical choice when he was promoted to the Presidency by the Ford family in 1980. An engineer, development executive and genuine piston-head, Petersen was also the antithesis of Lee Iacocca, whom he replaced. Never in modern history has an automotive CEO been so devoid of spin and hyperbole. No wonder Ford of the eighties looked to Japan for inspiration.

Petersen learned of Toyota’s use of quality guru Edward Deming. In the first coherent US automaker assault on “total quality,” Petersen adopted Deming’s techniques, and those of corporate guru Peter Drucker. As measured by owners, Ford’s vehicle quality improves 60 percent from 1980 to 1987.

The aerodynamic 1983 T-Bird launches a dynamic wave of efficient, exciting and successful passenger cars. The Turbo-Coupe has the world’s first fully computer controlled (EECV-IV) integrated turbocharged fuel injected engine. The Ranger successfully takes on the long-established Japanese compact pickups, becoming the category best seller for many years. The Fox-body Mustang’s balance of light weight and V8 power at an affordable price reinvents and dominates the pony-car class.

In the biggest single auto product gamble in modern times, Ford launches the 1986 Taurus. It leapfrogs the competition, and sets the packaging and dynamic standards for the modern US-market sedan. For sells 400k Tauruses per year, grabbing the best-seller crown from the Honda Accord by 1992. Petersen employs Japanese “just in time” production methods at Ford, and the Atlanta Taurus factory becomes the most efficient auto factory in the US (including Japanese transplants).

Petersen’s honest, cooperative, non-political management style motivated FoMoCo’s management ranks as never before. His deep experience in car development as a car enthusiast ensurfed that Ford’s products were consistently more dynamic than their competition.

In trend-setting, car-conscious California, Ford becomes the number one selling brand. The Blue Oval Boys’s passenger cars sell well in The Golden State; GM and Chrysler have already become irrelevant (except for trucks and Corvettes). Ford’s profits explode. In 1986 and 1987, Ford was the most profitable car company in the world. As its stock ascends from around $1 in 1982 to $17 in 1987, “F” becomes a Wall Street darling

But what really separates Petersen from the rest of his ilk: he maintains perspective, candor and modesty– despite the phenomenal success that was his doing. It’s a stark contrast to Chyrsler’s Iacocca, who had to be dragged out of Chrysler kicking and screaming, well past his sell-by date. And then tried to weasel his way back several more times, Petersen consciously and quietly retired two years early in 1990 at the age of sixty-three. He wanted a new management team to have a running start dealing with the clouds he clearly saw gathering on Ford’s horizon.

In an exceedingly frank and prescient farewell discussion with thirteen journalists the day before he retired in 1990, Petersen expressed grave concerns about the future of the U.S. auto industry. According to one reporter, “his terse answers were sobering. The word survival came up a lot because it’s no joke to ask how much of a home-grown auto industry will exist a generation from now.”

“Because of the deep partnerships of the Japanese companies with their suppliers, changes can be implemented predictably and rapidly. The steady loss of state-of-the-art manufacturing technology in the US manifests itself in the longer product cycles and lower real or perceived quality of the domestic automakers… There’s this nibbling away, this gradual erosion that’s occurring that nobody sees very well, I don’t think. It bothers me a lot.”

Petersen ended with a warning that “the manufacturing sector in the US is going through the same process now as the agricultural sector went through in prior generations… we have to accept that it (manufacturing) will generate a far smaller percentage of the employment of the people of the United States than it does now or did 10 years ago. There will be far fewer jobs.”

Those words spoken eighteen years ago seem remarkably prophetic (“how much of a home-grown auto industry will exist a generation from now?”) ,especially during Ford’s current déjà vu crisis. Alan Mulally has charted a very similar course for Ford’s salvation, emphasizing efficient European cars and quality. Will the same medicine save Ford a second time?

High gas prices are a bit like the weather: everyone’s complaining but no one’s doing anything about it. Actually, that’s not true. At the sharp end, consumers are buying more fuel efficient vehicles. They’re driving less. We’ve even heard talk of gas-conscious automobilists driving more slowly. Now THAT’S serious, and, to mind, reprehensible. So, while the mainstream media is full of helpful advice on how to use less gas (e.g. take those gold bars out of your trunk), I hereby present TTAC’s unconventional guide to saving fuel this summer.

1. Let someone else drive. I know: Hell is other people. But we’re talking about freeing America from its dependence on foreign oil, stopping the oceans from overrunning the coasts (whatever happened to that idea?) and saving enough money to buy better quality alcohol. Which reminds me: designated drivers don’t usually drive your car…

Of course, that dodge won’t work during the day. In that case, don’t have a car– even if you do. In all cases, common courtesy says you should offer to help pay for gas. But before you do the right thing, hide your credit cards and carry no more than $10 in cash. By the same token, avoid car pools. They are official arrangements where someone is always calculating costs.

2. Don’t go to work. Let’s face it: work sucks. And half the time you’re there, you’re doing nothing more than schmoozing with people you can’t stand or sitting in meetings where nothing that gets discussed actually gets done. Telecommute.

The trick with this strategy is to start small. Ask the boss for an afternoon off– ONE– to work from home. Send him enough email cc’s so that he knows you’re not not working. Then make it formal. Then gradually increase it to a full day. Then two. Then three.

And make sure you show up on days when you’re NOT scheduled to be in the office. That way the boss knows just how dedicated you are (i.e. he’s never quite sure if you’re supposed to be there or not).

3. Get everything delivered. If humans weren’t warm-blooded, we wouldn’t need to eat so damn often. But hey, we didn’t get to the top of the food chain (never mind Camaro-ownership) by basking in the sun all day long. Darwin rules. As does your local grocery chain’s delivery service, which will gladly drop off all your basic foodstuffs after six hours spent registering on the internet.

In fact, pizza lover, virtually everything you need to survive in this life can be delivered to your door: your children, dry cleaning, alcohol, hookers, everything. Alternatively, stop buying so much shit in the first place. A 1080 HDTV with a PS3 (rent games and movies via snail mail) and a maximum cable bundle will help in that regard. Hey, sometimes you gotta spend money to save money. I mean, the environment.

4. Add a fuel surcharge. This is the flipside of bumming rides, and it’s surprisingly effective.

First and foremost, don’t let anyone passenger in your car without kicking-in for gas. Guilt trip them on saving trees or limiting foreign entanglements or personal penury. It may sound mean– OK it is– but deduct a small percentage from your children’s allowance to teach them about environmental responsibility. Call it the Revenge of the Soccer Mom.

If you’re the boss, tack on an optional (small print) customer charge to cover your gas costs. If you live close to either coast, call it a “carbon offset fee.” If you’re an employee, ask your boss for a gas allowance. Again, start small. “These fuel prices are killing me. Do you think the company could kick in $10 a week for my gas?” Get the accountant in the habit of paying for your receipts…

5. Get the taxpayers to pay for your gas. There are lots of part-time government gigs– both elected and appointed– that come with free gas (if not a free car), from city councilor to “private consultant.” Most drivers won't consider this option because it means spending thousands of hours telling people exactly what they want to hear (i.e. lying) despite the fact that they're ill-informed or deeply misguided. But there is a hidden payoff: public service puts you in the unique position where you can lecture people about the evils of Big Oil knowing that these same people are paying your fuel bills.

And now I throw it to you, TTAC’s Best and Brightest. What other “unconventional” methods can beleaguered motorists deploy to take the sting out of soaring fuel costs? Although I’ve restricted myself here to the [barely] plausible, feel free to wander into the realm of the ridiculous. Remember: our country’s future, indeed, the safety of our entire planet is at stake! Not to mention your beer money.

Few things in this world are as dramatic as the start of a NASCAR race. War, for instance. Or the launch of a Saturn V rocket. The crowd rises from their seats in anticipation. The starter stands in his box with flag in hand as the bestickered phalanx of cars rounds turn four. After the pace car scurries from view into pit lane the violence of dozens of highly tuned V8 engines is unleashed in unison. You can sense the invisible force of the sound approaching.  Like others, I reverently remove my radio headphones so that I can fully ingest the aural assault. I feel the high frequency vibration in the aluminum stadium seats beneath my feet. And then it hits – a sound so big I hear it with my entire body. You don’t get that on TV.

These starts, which are repeated after every caution, are like hits of crack to NASCAR addicts. Add the excitement of aggressive bump-n-grind driving, a few spectacular crashes, and a dramatic finish, and the crowd could care less that the racers only turn left.

My latest foray into NASCAR society occurred at the Craftsman Truck Series Sam’s Town 400 at the Texas Motor Speedway (TMS) with my youngest son. Forget every exaggerated stereotype you might have of NASCAR fans. Real Truck Series fans outdo them all. A regular NASCAR car event looks like an NAACP convention compared to the gene pond from whence Truck Series fans hail. Equally homogeneous: the choice of vehicle that they drive to the stadium. That would be pickups.

TMS speakers blared alternative metal music while fifty-one thousand patrons found their seats. I don’t guess that many in the crowd have songs by Disturbed, Slipknot, or Mastodon on their iPods at home, but somehow the music is an appropriate prelude to thirty-five 700 horsepower 358 cu-in pushrod V8 engines screaming at full voice.

As second hand cigarette smoke wafted all about us, my host, a longtime Texas Motor Speedway season ticket holder, commented, “I know I need to lose a few pounds but in this crowd I feel skinny.” I don’t mean to disparage my fellow racing fans. They are what they are and proud of it. They’re knowledgeable of the sport and quite hospitable– that is unless your last name is Busch (Bush is okay). As in Kyle Busch, the most hated man in North Texas.

Busch is vilified as a dirty, nay evil, driver. Boos erupted as the man sporting a black cowboy hat was introduced. The NASCAR points leader was set to start in last position because he was a late driver change for the #51 Miccosukee Resorts truck. He was also in the midst of a very busy weekend, attempting to win a trifecta of races in three different classes at three different tracks on the same weekend. Pre-race gossip centered on the scandalous prediction that the bad boy had made before the race; that he would break into the top ten within the first fifty laps.

NASCAR Craftsman Truck Series pickups share little in common with the Chevy Silverado, Ford F-150, Dodge Ram and Toyota Tundra pickups that share their names. Sponsors such as Lumber Liquidators, Construction Corps, Power Stroke Diesel by International, Road Loans, and, my favorite, GunBroker.com, reflect the rural working class values. 

Pole position went to newcomer, Justin Marks. After the first dozen laps, five trucks withdrew due to mechanical problems. The race fell into a predictable rhythm: race for about twenty laps (until tires become worn), crash, pit under a caution flag, cleanup, lather, rinse, repeat.

Ron Hornaday Jr. in the #33 Camping World Chevrolet emerged early in what appeared to be the fasted truck in the field. True to his word, Kyle Busch made quick work of the rest of the field. By lap 55, Busch was in the number nine spot. From that point forward he seemed content to lurk between fifth and seventh place without pressing the leaders.  But every spectator knew where he was at all times and that he could surge to the top at will.

With eleven laps to go, Busch leapfrogged into second place. Tension built for an epic battle. Concerned fans held three fingers high with both hands in support of #33 Hornaday. This night good triumphed over evil. Hornaday’s car was just too fast; reaching the green-white-checkered flag 0.283 seconds ahead of Busch.

As for my son and me, we had a great time. And although our seats were nestled in the shade beneath the luxury boxes I think my neck turned a little bit red.

Saturn is dead. Despite a thoroughly refreshed line-up– including a mild hybrid, a Lambda-dancing CUV, a sexy sports car and a cute ute– the brand can’t get wood. In fact, Saturn’s sales are the very definition of flaccid. Year-to-date, they fell 19.9 percent. In May, sales sank 32.7 percent. In this process of final dissolution, the once autonomous upstart GM brand has become an irrelevant Opel outpost. Saturn’s Spring Hill, Tennessee factory is now in Chevy’s hands. Plastic body panels and unique designs have been swapped for rebadged leftovers from the GM parts bin. Saturn’s slow homicide is more than a shame. It offers a discouraging glimpse into General Motors’ dysfunctional culture.

The Saturn brand was GM CEO Roger Smith’s $5b excellent adventure. Both internally and externally, GM sold its new brand dawning as the American automaker’s import fighter. And why not? The company’s homegrown initiatives to repel the import invasion– the Corvair, Vega, X- and J-cars, etc.– all flopped spectacularly. Equally important, Smith recognized the cultural paralysis within his own Empire. Something had to be done.

Saturn’s mission: drag GM kicking and screaming into the twenty-first century, the new era redefined by The General’s foreign competition. To do the deed, GM’s re-boot boasted all the hallmarks of the Toyota Production System– just-in-time inventory management, lean manufacturing methods, flexible job classifications– combined with plant automation that could eventually render the United Auto Workers irrelevant. In tandem with the California-based, joint NUMMI operation (with Toyota), Saturn would reinvent GM, if not the entire automotive business.

Smith singularly failed to cultivate the organizational buy-in necessary to implement the plan. Managers fond of rejecting anything remotely Japanese considered Saturn a parasite sucking resources from their pet projects. UAW leaders knew that Smith would use his beloved robots to sign their pink slips if given the chance.  Smith’s efforts to expand centralization and badge engineering among the existing divisions and his abrasive personality only deepened bureaucratic resentments.

Despite the acrimony, Saturn fulfilled its initial promises. Reviews were favorable. Buyer loyalty for the no-haggle proudly domestic car brand achieved cult-like status. But internal politics sealed the marque’s fate. Smith retired in 1990, just as Saturn’s first cars were launched.  Robert Stempel, Roger Smith’s loyal successor, resigned only two years later. As its champions disappeared, Saturn floundered no sooner than it had begun.

Saturn’s limited, aging lineup quickly stagnated. Sales peaked in 1994 at 286k units, well short of the 500k goal. In fact, 1993 was Saturn’s only profitable year.

Jack Smith became CEO following Stempel’s ouster.  Clearly no relation to Roger, the new Smith dismantled the trappings of his namesake’s regime. GM’s standby strategies favoring cost cutting and large, low R&D vehicles were restored. Smaller cars, sad aberrations best left to foreigners, would be obtained from overseas from marques such as Isuzu and Fiat. 

Current CEO Rick Wagoner continued Jack Smith’s agenda. Wagoner also peddled gas guzzlers, although this time to no avail, while completing the rogue Saturn’s dismemberment. If Jack Smith plunged in the knife, Rabid Rick twisted the blade.

Saturn really was “a different kind of company.” But resistance to change is a hallowed tradition within the GM family.

Peter Drucker, the father of management consulting, encountered GM’s insularity as early as 1946. His seminal study, Concept of the Corporation, extolled the automaker’s organizational successes, but advocated increased decentralization and empowerment of line workers. Drucker’s questioning of GM orthodoxy was considered blasphemy. Managers caught with the book were subject to termination. Then-Chairman Alfred Sloan was so incensed he later wrote his memoir specifically to rebut Drucker’s analysis.

Six decades later, little has changed. Success is perceived as an entitlement, deserved after decades of dominance. A not-invented-here mentality and superiority complex make meaningful change nearly impossible. Foreign rivals are still regarded with contempt, their tiny cars mocked as effete trinkets unsuitable to American tastes. Worker autonomy and equitable supplier relations, essential components of successful JIT lean production systems, are disdained for usurping management’s sacred duty of unilateral, top-down leadership.

From management’s perch above, the dismal sales of Aura, Outlook, and Astra confirm the fate of those who dare stray from the General’s path. Ironically, the dying legacy brands are adding to Opel West’s declining stature. Buick’s recent Chinese exploits and the baby boomer buzz of its Enclave crossover raise false hopes for the future of the Buick-Pontiac-GMC trifecta.

The upcoming redesigned 2010 Aura should deliver the knockout blow. GM intends to spoil that party by shackling the attractive Eurosedan with uninspired US-spec drivetrains. With their standalone stores and inadequate corporate support, Saturn’s dealers can expect to pay dearly for that mistake.

Sadly, the next Aura’s misfire will assure GM management of what it has believed all along: Americans don’t really want smaller cars. Caught within the quagmire of Michigan’s splendid isolation, Saturn never stood a chance.

May’s new car sales numbers are in and things are looking bleak for The Big 2.8. Their corporate Spinmeisters can blame a down economy and sky-high gas prices all they like, but sales drops well into the double digits are never good news. Market share declines aren’t exactly glad tidings, either. That said, truth be told, Black Tuesday is actually a good sign. It shows that the domestic automakers have finally “accepted” the market. Whether they’re too late is another question entirely.

I repeat: the domestics’ massive sales drops are a good sign, not a good thing. The car market has been “overheated” for at least the last six years. Chrysler, Ford and GM have all been pushing easy credit, “Toe Tag Sales,”  “employee pricing” and the like all year, every year. Compounding this "stack 'em high and sell 'em cheap" mentality, they dumped umpteen million extra vehicles onto fleets. “Move the metal” was their immutable mantra.

All this discounting “pulled forward” hundreds of thousands, even millions of sales. People used to buying a new car every five years were “trading up” after three. “Ten year” customers were buying in after five. Metal was moved but little or no profits were banked (all those discounts) and a lot of potential buyers were left completely “upside down” (all those fleet sales cratering resale value).

If The Big 2.8 were ever going to sell anything other than light trucks at a profit, they had to let the market “come up for air.” At the same time, they need time to re-tool to build more of the cars– yes, cars– people were bound– yes, bound– to want. And there’s another important reason why they had to ease off the throttle: financing.

Back when the U.S. auto industry was riding high, the domestics’ pet finance companies booked massive profits. Part of this was down to simple structure; a financing unit is little more than a bunch of computers, a phone center or two and a [relatively] small work force, most of whom make a lot less than assembly workers. With that kind of overhead, even fairly small margins can add up quickly. Given the sort of volume The 2.8 can move, those margins multiplied into the stratosphere. 

Sinking sales means fewer loans. So The Big 2.8 bled the finance unit (easy terms and low rates) to prop-up manufacturing. It was an excellent strategy– for going broke twice as fast. Now that credit has been tightened (dodgy loans coming home to roost and all that), the finance arms can finally get on a firmer footing. In fact, sales and profits should return if not rise when the “fire-sale” customers’ cars wear out. This could take a couple of years and would seem to hurt the dealers– but not as much as you might think.

Dealers are conflicted. On one hand, they’re selling fewer cars. Generally speaking, they still make SOME profit, no matter what the discount. So volume is important. On the other hand, they are three to four months (minimum) behind the manufacturers curve on product lines. That’s a fancy way of saying they have a shit load of trucks and SUVs on their lots. Dealers need time to clear space and change their mix. But more importantly, they need to decide whether they want to stick it out at the reduced sales volumes.

For the manufacturers, toughing-out dealers is a major problem. Not because the dealers want to stay in business at any cost. Because they want the best pay-off to get out. The Big 2.8’s dealer deadwood are like holdout tenants in an apartment going condo (or UAW workers looking for a buyout). The longer they wait, they nastier it gets. But the longer they wait, the more they’ll get for leaving.

Bottom line: these sales drops are more of a symptom than a cause. The Big 2.8’s collective collapse is not causing them to finally face reality. The drop is the result of them finally facing reality and giving-up most of their number inflators. 

Fifty years ago, GM had over 50 percent of the entire US market. As of May, the collective 2.8 don’t even hold that much. While that's still a huge slice of pie to bake (about 7.5m cars a year), it’s far below their production capacity. Until Detroit– and by that I mean their ops in Canada, Mexico, Australia, Belgium as well– get their production and model mix in line with the REAL market is (not where they’d like it to be), profits will be… elusive. Meanwhile, there's only one possible way for Detroit to recover market lost share: if and when one of them goes belly-up.

There is an oft-quoted British proverb: “if you find yourself in a hole, stop digging.” We can’t be sure if this is the bottom. As bad as it looks, at least the boys from Detroit have stopped digging– about two years late. 

There are two kinds of people: people who split the world into two kinds of people and people who don’t. I usually consider myself part of the latter group. However, after spending a few years with The Truth About Cars, I’ve become fascinated by the variety of opinions from readers who share so much in common. Type in anything to do with the Prius and watch the battle lines form. Last year, The Cambridge Strategy Center published some ideas that go a long way towards explaining why this website isn’t always unified, taken as gospel and/or followed like law. It seems there are two kinds of car people.

The Cambridge Strategy Center is a marketing/brand consultant think tank, serving clients as diverse as Coca Cola, Phillips and BMW (who embraced and set forth the Center’s ideas regarding car consumers).  Inspired by Jungian personality archetypes, the Center believes drivers are either ‘instrumentalists’ or ‘expressives.’

Instrumentalists believe cars should serve a variety of purposes: commuting, schlepping, joy riding, the works. In fact, the closer their car is to a Swiss Army knife, the better. 

Instrumentalists tend to name their cars, overlook windshield wipers that deploy with the high beams and believe that you can coax a car to start with a soothing voice. In general, instrumentalists want their car to be the kind of friend who helps you move on a Saturday, attracts the opposite sex and stays out of a ditch during a snow storm.

Expressives perceive their vehicles as [yet another] expression of their personalities. They are what they drive.

Expressives want a car that shows they are smart, rich, hip, practical and/or environmentally conscious.  Conversely, in a different form of expression, they might not give two puffs what you think.

Expressives like to drive. All driving is a form of competition, whether it’s racing the wannabe in the Honda Civic or owning the world’s most fuel efficient vehicle. The believe an automobile should do one thing and one thing well. Expressives want the best rock climber or dragster or delivery van.

The Caterham is extreme example of an Expressives’ ideal whip. Quick and harsh and so severally pruned for performance that only Jonny Lieberman might like it (and probably not even him). While any niche vehicle will illustrate the Instrumentalists’ desires, a Honda Insight or H1 also serve as excellent examples of their heart’s desire.

Both Instrumentalists and Expressive can care deeply about cars– for vastly different reasons. Their personal rating systems diverge, cross and curve like the streets of Boston. An instrumentalist might consider a Porsche Cayenne sublimely multi-functional; an expressive might contend that the same model is a waste of space and a brand betrayal. 

When it comes to the new car market, Instrumentalists rule. The preponderance of Camcordimas on American highways illustrates the point. By the numbers, these cars are almost identical. They’re also not far from the Malibu, LaCrosse, Galant, Aura and a host of others an Expressive would be too bored to list.

The entire SUV surge can also be explained by the preponderance of Instrumentalists. Sport and utility?  Both traits are severely compromised-– a Ford Explorer can't haul as much as an Econoline or traverse inner Greenland without some serious modification. It can ALMOST do everything, though. And that is the point of an instrumentalist’s instrument. 

For a car to appeal to both camps it must be useful for a number of tasks, and do at least one thing better than everything/anything else. Obviously, there aren't many cars that fall into this category. But any vehicle that does can attain both cult status (Expressives) and popular sales (Instrumentalists).  The Volkswagen Beetle, the early Toyota Corolla, a proper Land Rover, a genuine Jeep and, most recently, the Toyota Prius are the “real” crossovers.

A list like that just begs for debate. It has to, because everyone who comes to this site arrives with a different set of values. My guess is TTAC readers tend to be Expressives, though it’s not a black and white distinction. People are shades of gray. Most of us need to adapt pocket book to lifestyle to desire.  You can’t fit three kids in an Audi TT unless you’re very angry. In a Honda Pilot, the entrance ramp to the I-90 is simply no fun.

This would account for the large number of consumers who own two vastly different cars. RF’s Porsche Boxster S and Honda Odyssey make a strange, but entirely understandable pairing. How many “boring” sedans sit next to a Miata in the garage? Lots.

Personally, I don’t like to force the world into Venn diagrams. I lean different ways at different times. And I now know that many of the disagreements here stem from diverse values, not from the fact that one commentator is smarter than another. Present company excluded, of course.

The fastest way to kill an automotive brand: sell a POS. The bloodletting caused by a brand new clunker can be spectacular. Anyone remember the 1981 Cadillac Fleetwood V-8-6-4? How about the Cimarron? It has taken Caddy more than 20 years to climb back from that double debacle if, indeed, they have. But there’s another, slower and more insidious way to ruin a storied car brand: distraction. When a carmaker builds a vehicle that muddies the marque’s core message, it mortgages its future. To wit, the Lexus LF-A.

Of course, the Porsche Cayenne used to personify the problem– before the sports car maker released its SUV. Once the Cayenne smashed sales records, purists’ caviling quieted. How can you argue with success? Never mind the long-term effects on branding. Never mind that Porsche’s using the money to buy VW. The market has spoken. Which reminds me of the old punch line, “We’re just arguing over price.”

Talk to me in ten years, when the bloom is off the rose. Meanwhile, building a car that’s a genre too far is one thing. Offering a product that completely betrays your brand values is another. I don’t need to resurrect my arguments against the so-not-a-luxury-car Lexus IS-F. Actually, I do. The new LF-A supercar takes the exact same mistake made by the IS-F to the next level, combing brand betrayal with yet another cardinal sin for automotive brand managers: the halo car.

Like anything else, there are halo cars and there are halo cars. There’s the deeply misguided (I don’t have the money to buy a Nissan GT-R so I guess I’ll buy a Maxima instead) and the just plain dumb (who the Hell can afford THAT?). The best way to separate the wheat from the carbon fiber titanium-covered chaff (needed at those speeds): the price difference between the halo car and the next model down. Discounting aesthetic, genre and brand focus differences, the larger the price gap, the more ill-fated the endeavor. 

The Lexus LF-A will sticker for a cool $225k. The next model down, the LS600h hybrid sedan, costs $104,900. The $120,100 price gap elevates the LF-A from desirable range topper to WTFer– and dooms it to failure.

Just ask Daimler, whose slated-for-execution Mercedes McLaren SLR AMG supercar was a major flop at $495k (not including discount). Or Porsche, whose $440k Carrera GT ceased production 230 cars shy of its stated sales target. And these are brands with heritage, whose prestige and racing history makes their stratospherically-priced products inherently collectible.

The counter-argument is entirely emotional. Supposedly, all halo cars cast an unquantifiable glow over the brand’s more prosaic products. The LF-A will drop-kick Lexus’ stodgy image, making all Lexi more appealing. If I was a Lexus stockholder, I’d be uncomfortable with any multi-million dollar investment based on psycho-babble. If I was a brand manager, I’d want statistical proof that Lexus’ image is somehow lacking amongst owners or intenders, and that a supercar would rectify this theoretical problem.

Toyota is a wealthy company. They can afford to make mistakes like the LF-A without losing any metaphorical sleep. But it is a particular KIND of blunder, one that reveals a dangerous new turn in ToMoCo’s corporate attitude.

Speaking of baseless psychological speculation, I believe that building and selling a supercar is a bold statement of corporate health and vitality. Can you imagine Ford releasing its $140k GT now? A halo/supercar says to the world, look at us! THIS is what we can do! (Or never mind the Focus, THIS is what we can do!) But there’s a fine line between being bold and hubris, and hubris and stupidity.

This is why Toyota has cultivated a corporate culture based on paranoia. Fear keeps you focused. You never, ever forget the downsides of any of your potential actions. You always look for the safest option– especially when you’re doing something dangerous. Traditionally, the Toyota Way follows Sun Tzu’s dictate: never to fight a battle unless you know you’re going to win. It’s not for nothing the first Lexus looked like a Mercedes E-Class.

The new Tundra’s sales targets represented a huge miscalculation by the Japanese automaker’s product planners that will cost Toyota billions. And now, the LF-A boldly goes where Toyota has never gone before, both in terms of money and image. Why? For what are they trying to compensate? Lexus would have been far better off transforming their dopey SC into a credible Mercedes SL challenger. Or continuing to refine what they already have. Or just sending their loyal customers a nice “thank you” service voucher. 

I know TTAC’s Best and Brightest welcome automotive excellence in all its forms. But sometimes excellence is boring, and comes from slow, steady progress. It’s a lesson Toyota taught the world. The LF-A is another step towards unlearning it.

Unlike arm wrestling or Martini making, when it comes to currency, there’s an upside to being weak. Especially if you are, say, an American car manufacturer fighting pesky foreigners.  As the value of the dollar falls overseas, the price of American-made cars and trucks falls as well. Theoretically, a lower price should mean increased demand. So, is the declining U.S. dollar the cocktail Detroit needs to lift their spirits? 

Between 2002 and 2007, American auto exports doubled, from about $25b to $50b. Over the same period, imports grew to $150b (they’ve leveled off for the last 18 months). The bad news: exports from General Motors, Ford and Chrysler combined equals a third of the vehicles the US imports. What’s more, roughly half of The Big 2.8’s exports are sent to Mexico and Canada.

The good news: America has stopped demanding that more cars built elsewhere. The rest of the world is slowly opening to the important of American metal.

Russia is a growing market for big SUVs (while America is growing parking lot for same). Sadly, Russian import tariffs make the Berlin Wall look like a welcome mat. In this they are not alone. And over the last few years, U.S. foreign policy has been something less than persuasive when it comes to removing trade barriers. Meanwhile, the Euro market has deflated. And the go-go growth in India and China is slowing.

Even so, both GM and Ford are escalating exports, specifically those aimed at China and Latin America. Chrysler is shifting some of its manufacturing back to the States. It’s a slow process. Chrysler, for example, plans to move more Jeep production stateside as soon as its contract with Austria’s Magna Steyr runs out. In 2009. All three automakers suffer similar hand-tying. And none of this is happening in a vacuum.

While Detroit tries to adapt to changing economic conditions, Aichi and Munich move their pieces around the board as well. Every major auto manufacturer has a facility in the U.S. As the dollar appears to be in the doldrums for the foreseeable future, many are looking to expand or add capacity in the New World. BMW is building the next generation X3 in its Spartanburg plant, right along side the X5. (Magna Steyr will be losing that contract too.) Volkswagen/Audi/Porsche is/are looking to construct a new plant in the U.S., possibly North Carolina.

All of this is good news for the American worker. Mitsubishi not only builds vehicles in American for Americans, they export. The numbers are still paltry– Mitsubishi will export around 12,000 cars this year– but auto exports are trending upwards. Honda, Toyota and Mercedes export from the US. They are adjusting quickly.

Exactly how much a discounted dollar changes price is as murky as any car deal. Carmakers contracted for the steel, copper, plastic and other commodities being formed into a car this morning months or years ago. The parts going into a vehicle come from all over. While the dollar slid 11 percent against the Euro in 2007, the rate is different for other currencies. The dollar has been in a steady decline for six years, so everything is in flux. It is not unreasonable to assume a 10 to 20 percent premium on Japanese and European models. Or the flip side– 10 to 20 percent off American rides.

So the Cobalt should be the new Wii, right? Regardless of how much The Big 2.8 would like to make money in real estate and mortgage derivatives, it all comes back to cars. The bottom line: Detroit did not prepare well for this moment.

Some cars built in America are, in theory, ready for foreign service: Jeeps, Corvettes, Cadillacs, Chrysler minivans. But these are specialty items not found in the bread and butter aisle of the market. They sell in tiny numbers, if at all (Cadillac BLS). Although GM (Chevrolet, Buick) and Ford (Ford) have some brand equity in foreign climes, it’s based on locally/foreign-made products.

It’s hard to think of a single Big 2.8 product that’s ready to be shipped abroad in large numbers. While GM-Ford-Chrysler scramble to adjust their U.S. product mix to reflect high fuel prices, they’re behind the curve, and will be for some time. And despite all this talk of downsizing, American cars are still over-sized for most foreign markets. The constant bloating of transplant product proves that size still matters, and doesn’t translate.

Exports from the States have increased, but it is going to be real tough to make those numbers grow without product the rest of the world wants. Leaving out North America, the Ford F-150 is not the world’s best selling vehicle.  The rest of the globe likes lithe, economical Golf-Corolla-Civics. As Detroit wrestles with another lost opportunity, let me suggest a good, stiff drink.

Why is gasoline so damn expensive? The mainstream media has rounded up the usual suspects. They demonize oil companies (for excessive profits), lambaste environmentalists (for blocking domestic drilling and refining), and sock it to speculators (for fear mongering over supply). Simply put, the current crisis is a speculative bubble whose impact to American consumers is exacerbated by domestic economic conditions. I fully expect crude oil will trade below $80 a barrel in the not too distant future. Meanwhile, let’s tackle this one myth at a time. 

Oil companies are easy targets for the public’s gas-price-related ire. ExxonMobil recently scooped second on the Fortune 500, with annual earnings of $40.6b. Chevron slipped in at number three, with $18.7b of profit. Surely these under-taxed wicked corporations screwed unwitting customers to amass these ill gotten gains profits.

Here's a politically inconvenient truth: most of the oil companies' profits are the result of volume, not market prices. ExxonMobil, Chevron, et al make in the neighborhood of 10 cents per gallon– whether gasoline costs $1.50 a gallon or four bucks. Big Oil’s making big bucks because there’s record worldwide demand, especially in India and China.

And let’s not forget history. The oil companies we know and despise today are the result of a devastating supply glut during the early ‘90s. That “crisis” pushed these companies to the brink of extinction. Record losses spurred Exxon to merge with Mobil, and Chevron to merge with Texaco.  During the same time frame, Conoco and Phillips combined and British Petroleum gobbled up Amoco.  The mergers lowered overhead expenses by eliminating redundant exploration and administrative overhead expenses.

The second myth is that supply shortages are sending U.S. pump prices skywards.

While demand is certainly at an all-time high with the emergence of the insurgent Chinese and Indian economies, supply is also plentiful. Have we passed “Peak Oil?” As far as the oil future’s market is concerned, it doesn’t matter. Even the greatest pessimists concede that known reserves will last at least another fifty years.  More optimistic (and realistic) estimates stretch hundreds of years hence. Either way, the delivery dates of oil contracts being traded today are days, not decades, from now.

On a more immediate level, fuel shortages are a fiction. I’m not aware of a single gas station that’s unable to refill its fuel tanks or factory unable to obtain required petrochemicals or plastics. To the contrary, in April, U.S. stockpiles grew nearly 12m barrels. Iran is now storing crude in old tanker ships floating in the Persian Gulf because they have run out of space in conventional storage tanks.  The world’s positively awash in oil.

How about this one: America needs more refineries; the greenies are blocking our energy independence.

Although no new refinery plants have been built in the U.S. in a generation, there’s no shortage of refining capacity. Oil companies have retooled to improve the refining capacity at existing sites.  Currently U.S. refineries are operating at only 85 percent capacity. Go figure.

The corollary to this erroneous supposition: domestic drilling would alleviate high prices.

Should Uncle Sam allow ExxonMobil to tap ANWR? As far as today’s oil prices are concerned, it really doesn’t matter. Even if there were pumps in the protected Alaskan field pumping at full capacity right now, crude oil trading in global markets would continue largely unfazed. If we pumped more, the rest of the world would simply pump less to prevent a glut. OPEC makes these kinds of adjustments every time they meet.

So here’s the truth about high oil and thus gas prices: the pain at the pump is the result of a weakening dollar and strengthening speculation. During the last year the U.S. dollar has fallen 14 percent against the Euro, nine percent against the Chinese Yuan, and 15 percent against the Japanese Yen. In other words, it takes more dollars to buy the same goods on the world market.

The other culprits, speculators, are taking their money out of the falling stock market and collapsing real estate investments and pumping them into the red hot commodities market. Buying oil futures has become intensely popular, driving prices heavenward despite an ample supply of product.

Who are these opportunistic speculators that are causing you so much grief every time you fill up your SUV? You. Most of us have pensions, insurance holdings, or various investment funds in our 401K that hedge losses in the commodities market-– usually without the knowledge of the ultimate beneficiaries, you and me.

Market fundamentals don’t support the current high oil prices. As surely and as predictably as the technology bubble burst after a decade of market excess, world oil prices will come tumbling down, as investor dollars flood back into revitalized stock and real estate markets. When will this occur? That’s the trillion dollar question.

There’s an often-repeated statistic: U.S. Buick dealers sell just four cars per dealer per month. It’s true, but c’mon; that was last year’s totals. In March, Buick sales slipped to three cars per dealer. Thanks to TTAC’s Frank Williams, I’ve had a chance to examine the exact dealer and sales stats for the Beyond Precision people. Having deconstructed the data, I can declare that this seemingly absurd three cars a month number, while strictly true, isn’t the whole story. The “whole story” is much worse.   

First, to be strictly accurate, the 36 cars per Buick dealer per year stat doesn’t include trucks. Add-in Enclave sales and you’re up to 60 sales per dealer per year. (Only Ferrari, Isuzu and Rolls have lower averages.) You may wonder how any car dealer could survive on such meager portions. The short answer is, they don’t. GM’s 90 “exclusive” Buick dealers sell quite a bit more than a car per week. The problem isn’t these Buick stores; it’s the “dualed” and “tripled” Buick franchises; 29 of them for every solo dealer.   

To help you wrap you mind around those numbers, there are over 2700 places where you could, if pressed, buy a Buick. That “coverage” includes as many franchises as Toyota, Lexus, Honda and Acura. Combined. All to support numbers slightly larger than sales of Honda’s Odyssey. The scariest part ISN’T that the average Buick dealer sells a car a week (probably less). The bigger problem is that these franchises can survive selling so few.   

One of the less-mentioned side effects of The Big 2.8’s massive brand spread and bloated dealer networks: “franchise bloat.” GM, Ford, Chrysler have about 6500, 4000 and 3500 “dealerships” (i.e. buildings) respectively. Toyota/Lexus and Honda/Acura have about 1100 stores each; Nissan/Infiniti 1000. Now, let's talk franchises. Detroit automakers have 13,000, 6800 and 8300 franchises. Toyota clock in at about 1500; Honda and Nissan have about 1200 franchisees.    

Franchise glut means dealers are frequently bidding against each other on price, and fighting for product allocation. But there’s an even bigger downside for Detroit: multiple franchises give dealers greater leverage. A dealer receiving cars from two or more streams can concentrate their efforts where it’s most profitable (e.g. on whichever line is getting a marketing boost at the moment). The languishing brands can be milked for limited-allocation cars until a particular model catches fire. Or, in Buick’s case, not.

While it's been argued that single-line dealers lead to too many models spread across too many price points, at least a single-line car dealer can’t play Peter off against Paul at similar price points. In other words, they’re not hurting one brand by helping another.

But the single biggest problem caused by franchise bloat down Detroit way is that it’s made killing brands more difficult, rather than easier.

In theory, bringing in additional lines reduces the damages dealers can claim when you kill a given brand (Chrysler did this when axing Eagle). Yes, but– lopping off brands does nothing to trim the bloated number of dealers. A two or three-headed dealer may not be a money machine, but there is no real way to “starve” it.  

So, when you get right down to it, the real obstacle to killing Buick isn’t those 90 stand-alone dealers. They can be bought. It’s the 2600 other guys who will still be selling GM cars when the smoke clears.

Having to pay off 2700 dealers to reduce the “footprint” by less than 100 wouldn’t work even when GM was flush. Ford is in better shape; they at least only have effectively two brands (Mercury does not exist away from Lincoln or Ford). Of course, that makes terminating Mercury completely useless from the “reducing dealers” standpoint. And pity poor Chrysler/Cerberus. It really is a three-headed dog; some 75 percent of their dealerships are multi-branded, often offering all three marques.

Hang on. If franchise glut is such an enormous problem for Detroit, why is GM consolidating their dealer networks (Buick/ Pontiac/GMC; Cadillac/Saab/Hummer)? Hell if I know. The new multi-franchise system leaves GM with the same dealer glut as before. And now, if they really want to cut Buick dealers, they’ll have to kill Buick AND Pontiac AND GMC together.

In the meantime GM will have four competing “mainstream” distribution channels (including Chevy and Saturn). Well, at least sending one or two of these mega-franchises into that long good night is [theoretically] doable. Ford and Chrysler lack even that option.

And so three-cars-per-dealer Buick is, at the end of the day, a zombie. And now that GM (and Chrysler) doesn’t have the multiple billions needed to make these problems go away, there’s only way out of this entire over-dealered, over-franchised mess. But will anyone buy a car from a bankrupt automaker? From Buick NA’s perspective, it doesn’t really matter anymore. Now that’s scary.

My next door neighbor is one of those classic 'car traders.' He buys, fixes, drives, fixes, drives, fixes, etc. When the repairs finally get to be too much time and hassle, he sells the car. I've seen a lot of nameplates come and go through his driveway. Hondas and Nissans stay for a while. Saabs require constant weekend tinkering. And Volkswagens need more plastics than a Barbie factory. Only one brand has stuck around, for nearly a decade now: his family Volvo wagon. And therein lies the tale.

Back in the day, older Volvos were [rightly] known for their long list of standard safety virtues: side impact protection systems, whiplash protection, four wheel ABS disc brakes and traction control. Only an S-Class Mercedes or a few good friends from my home state of New Jersey offered more protection… and both required a lot more scratch.

These Volvo's of Yore were a lot more than just glorified safety barges. They were luxurious in a way that no Toyonda of the time could touch. The 'safest car on the road' was supremely comfortable, with Goldilocks perfect seats and terrific visibility. These thrones of near-luxury beatitude came complete with CD changers, turbochargers, all-wheel drive and a narrow girth. The combo made the Volvo wagon a favorite for buyers seeking a safe, European-style family car with a modicum of sporting character.

For a while, Volvo stood alone in the marketplace. Throughout the eighties into the nineties, while the Japanese and Americans followed the herd that became the SUV and minivan stampede, Volvo maintained its traditional virtues: a wagon (and sedan) that offered protection, build quality and comfort at a family-friendly price. It was a good bet– that unfortunately gave way to lots of bad bets.

In 1999, Ford bought Volvo. It wouldn't be fair to say that Volvo had jumped the shark by then. But you could say they'd lost their mojo. Or, more accurately, their competitors had found it.

At the turn of the last century, gas was [still] inexpensive, luxury was trickling down and, worst of all for Volvo, safety regulations had leveled the playing field. The Camry and Accord– once distant pretenders to Volvo's safety throne– released legitimate alternatives that cost thousands less than the mostly built-in-Europe S60's and V70's. Traction Control, standard ABS braking, side-curtain airbags, in-floor frame rails (used to move energy to the car body instead of the occupants) and new design architectures made these mainstream vehicles comparable to the sedan versions of Volvo's FWD models.

All of the sudden, Volvo's safety 'statement' became a debate. Still, if Volvo had simply progressed with the times in terms of product quality, the brand might have remained a serious contender. Unfortunately, Volvos were becoming expensive propositions for their soon to be disloyal customers. ABS modules, evaporator cores, severe engine throttle body issues (which required multiple recalls) and low-quality interior glues made virtually all the pre-Ford Volvos high dollar propositions for the automotive novice. The majority of whom represented Volvo's traditional conservative clientele.

The post-Ford 2001 refreshing of the V70 wagon resulted in numerous electrical glitches and transmissions that eventually went from a firm smooth ka-thunk to a $3000+ kaput. Volvo's clean competitive advantage gradually became a bit more hazy in the marketplace. J.D. Power reflected this new, less appealing reality when it released sub-par customer retention ratings for the Volvo brand.

By this time, Subaru had gained enormous traction amongst the Volvo crowd by offering cheaper and better made Foresters and Outbacks. In 2002, Volvo unleashed its XC90 into the American market. While the late-the-the-party SUV garnered tremendous sales success, the upmarket vehicle solidified a move away from Volvo's sensible, lower middle-class roots.

Despite its brand-faithful, class-leading safety, the thirsty XC was a "me too" vehicle with LOTS of lower-priced competition: compact SUVs with room, safety and features aplenty. Escapes, RAV4's, and CRV's posed a question for which Volvo didn't have an answer. "Why do we need to spend more for a Volvo?" At the same time, luxury brands' compact SUVs crowded Volvo from on high.

Today's Volvo is hanging in there. Sales have fallen 8.3 percent (to 106,213 units) year-to-date, but that's not bad in a generally down market. The bigger question is this: what is a Volvo? The revised V-wagons are an admirable attempt to recapture the old magic in America's post-SUV landscape, but the brand's defenders have positioned Volvos too high in the price ladder for its traditional clientele. The chances that Volvo can compete against the established luxury brands are, still, slim.

The term "Volvo wagon" as a phrase synonymous for affordable durability is dead. In the meantime, cars like my neighbors pre-Ford 1996 Volvo wagon are still running strong, giving serious street cred to a brand that really hasn't lead the field since 2001. Now what?