It’s déjà vu all over again. GM’s sales sink, the PR flacks weave a tangled web and the product guys dangle shiny objects in front of the easily distracted press to prevent them from focusing on the company’s ongoing, unstoppable rot. It’s got to the point where Buickman, the original tin foil hat guy, can’t be bothered to pen his usual protracted rant. All we get is three sentences, the first of which proclaims “Need anything more be said?” Well, yes actually. It’s time, once again, to talk about small cars.

It’s no revelation that GM is, was and will be ill-prepared for rising gas prices and increasing demand for smaller, high mileage vehicles. Back when they launched their “new” GMT900 based SUV’s, ttac.com (and everyone else) pointed out that The General had arrived late to the high mileage ball dressed in an oversized clown suit.

That was over a year ago. By now, GM should be at least two years into a small car project (or five), getting ready to stun the market with a Fit-killer, a Versa adversary and a Yaris crusher. And?

And now Chevrolet is running an on-line competition where consumers can choose between three foreign-made mutant micro-cars: the Beat, Trax and Groove. You know, hypothetically. ‘Cause they’re concept cars.

For the next two years, consumers looking for GM’s mark of excellence on a high mileage vehicle are still left with a choice of fuel-gargling SUV’s and pickups, marginally less thirsty crossovers, a wide selection of anemic rental grade sedans, a couple of ergonomically challenged toys (a.k.a. roadsters) and a small range of joyless (if frugal) penalty boxes.

Remind me again: who’s surprised that GM’s March sales are off seven percent from last year, while Toyota’s climbed 11.7 percent, Honda grew by 11.3 percent and Nissan increased 7.8 percent? Well, no one really– save those misguided souls who think the inherently unprofitable (and anemic) Opel Astra will take the US market by storm.

Nope. The miscalculations of the past continue to haunt GM, arguably the least agile automaker on the face of planet earth.

This is the point where I usually trot out one of GM Car Czar Maximum Bob’s inane auto show pronouncements, illustrating the fact that GM is so far behind the curve they’d almost be better off waiting until motoring trends come full circle. Something like, "The real question is will we build these types of vehicles in the U.S.? Historically, these types of cars haven't done well here. But clearly, things are changing."

Normally, I’d segue into a statement about GM’s inability to catch up with the transplants’ constant evolution with timely, segment leading products. But I've discovered a far better example of The General's general cluelessness and temporal distortions, courtesy of GM’s vice president of global design.

"I think American, and [I think] big," pronounced Ed Welburn at this year's New York Auto Show. ”Big has been very much a part of America. The highways are wide, the parking lots are quite large, but the interest level is there for a smaller car…

“I think it is time, especially as people are looking for a unique offering, to be a very creative, or to at least look at a very creative offering in the small car category."

Ed is certainly a corporate survivor, but who knew he spent the last five years as a survivor on a desert island, away from the U.S. automotive marketplace? GM's going to “look" at the "possibility" of building a creative small car? As John McEnroe would say, YOU CANNOT BE SERIOUS!

He is. They are. Incredibly, a full year into an unstoppable downsizing trend amongst American car buyers, GM’s still “thinking” about the whole small car thing– while the transplants are busy gorging themselves on The General’s lunch.

Given the now familiar litany of lost sales and declining market share, this parlous state of affairs leaves GM PR flacks without a coherent story to tell. In other words, there’s spin to be spun.

“In March, we saw continued strength and stability in our retail business led by gains in mid-cars, crossovers, economy cars and luxury SUVs," said Mark LaNeve, vice president, GM North American Sales, Service and Marketing.

"The Chevrolet Silverado, GMC Sierra, Acadia and Saturn Outlook are exceeding our expectations and confirm that when you offer the best product, value, segment-leading fuel economy and the best warranty coverage in the industry, customers respond."

While we’re happy GM’s exceeding their own “expectations” (a meaningless measure if ever there was one), and we’ll defer to Frank Williams' monthly “By the Numbers” editorial to provide the obvious truth behind the hype (a few bright stars do not a universe make), suffice it to say LaNeve’s recipe is spot on. In fact, The General’s competition is using it right now to kick GM’s ass.

When will they ever learn? Never. They will never learn.  

The last time Toyota sold sex-on-wheels it came arrived in the form of the flying flagship known as the Supra. The Supra holstered an inline six with twin turbos sending over 300 horses to the rear wheels (335i anyone?). But Toyota’s mid-market meteorologists knew which way the wind was blowing. So they sent their one trick pony car back to the factory to be made into rubber and glue. Now Toyota has two flagships with the combined excitement of rubber and glue: the granola Prius and the grandpa Avalon.

Opportunity doesn’t always knock; sometimes it breaks down the door with a crash. When my daily driver became the caboose in a rush hour conga line gone bad, I found myself in that placeless place where car reviewers go when the press fleet is permanently out to sea. To the chagrin of Saturnistas everywhere, I passed on the Ion proffered by the perky rental car desk jockey. At the appropriate moment, I gratefully grabbed the keys to a 2006 Mazda3 sedan. The four-door filly had been ridden hard and put up wet, bearing 16k miles. Another TTAC road test had officially begun.

When a chain smoker develops lung cancer after thirty years of habitual self-annihilation, their ill-health should come as no surprise to either the smoker or a casual observer. Likewise, The Big 2.5’s current tailspin is the direct result of bad habits stretching back some fifty years. Like a pack-a-day puffer, the Detroit automakers “felt just fine” for several decades. Eventually, inevitably, their dirty little habits caught up with them.

In the 1950’s, The Big Three rode America’s post-war economic boom to unprecedented profits. Their seemingly unstoppable success crowded out the domestic competition (Hudson, Nash, Packard, Studebaker). The Detroit capos reigned supreme, addicted to the high profits generated by a one-size fits-all strategy. So they cranked out nothing but full-size cars and trucks, counted the cash, paid off the unions, sat back and enjoyed the view. After all, why do anything different when the sun’s shining and hay’s being made?

The annual model change summoned forth more fins, chrome and horsepower– while hiding undersized drum brakes, marshmallow handling, numb steering and declining efficiency. While there were moments of brilliance amid the glitz and glamour, The Big Three decided Americans were suckers for sheer size and superficial flash.

Despite the eternal sunshine of Detroit’s spotless minds, European import cars started trickling into the domestic arena. By the late 50’s, the trickle had become a torrent. Corner car lots sold every conceivable (if obscure) European make: two-stroke DKWs, two-cylinder Lloyds, Renault Dauphines, Hillman Minx, Austins, Simcas, Peugeots, Citroens, VWs, Mercedes, Borgwards, etc. The Big Three launched their first counterattack in 1960.

Enter the Falcon, Corvair, Valiant and later, Chevy II. They were mostly seven-eighths scale full-size cars; vehicles that shared as many components with their bigger brothers as possible. The end result had certain relative merits, but import-style steering feel, handling and efficiency were not amongst them.

The new compacts sold well enough. Sales of “exotic” imports imploded in 1960– and no wonder. By then, most of the fragile machines were either dead or falling by the roadside. VW and Mercedes were a notable exception, importing robust cars within a proper dealer network. But the rest of them weird ferrin jobs couldn’t withstand American-style driving abuse—long distances and minimal maintenance. The lack of parts and service from fly-by-night dealers didn’t help.

The Big Three misread the tea leaves– they saw their compacts’ success and the collapse of import sales as complete vindication.

In Detroit’s mid-sixties’ euphoria, the domestics failed to notice that VW’s reputation and sales continued to grow. Soon, they were closing in on half a million sales per year. In fact, The Big Three’s compacts were stealing sales from the compact Rambler American and Studebaker Lark and their own land yachts– not the sturdy little German cars.

Anyway, the U.S. market was expanding so rapidly that the domestic compacts’ failure to stem the import tide was lost on their creators. Falling back on old habits, they put their compacts on a super-size V8 Juice diet.

By the late 60’s, Fort Detroit once again became aware of the foreign invaders. There were termites in the walls– VW bugs– and the sound of their collective chewing could not be ignored. At the same time, Toyota and Nissan put their heads over the parapet.

GM and Ford responded with a salvo of four cylinder compacts: the 1971 Chevy Vega and Ford Pinto. We’ll dispense with all the old jokes. Let’s just say that one nadir attracted another. Never mind the Pinto’s exploding gas tanks and the Vega’s self-destructing engines (aluminum block with cast iron head?), the terrible 2+2-some were packaging efficiency anti-matter.

At least the Vega handled well. Customers looking for a shrunken Camaro with a suicidal, gutless tractor engine, a three-speed stick (or two-speed Power-Glide) and interiors with all the ambience of a Rubbermaid storage bin loved it. Chrysler’s solution– The Plymouth Cricket (the imported English Hillman)– was no better, and a lot worse.

Meanwhile, Nissan had a hit with its Datsun 510, the “poor man’s BMW.” The Japanese import boasted a lusty OHC four, slick transmission, independent rear suspension and a practical but good-looking body. Toyota’s Corona was a little more boring (the company DNA?) but sturdy and fully equipped.

Never mind. The Big Three entered the 1970’s brimming with confidence. Their all-new ‘71 big cars were the pinnacle (and blow-out) of the American car’s evolution– from the 1200lb Model T to 5000+lb big-block barges longer than a Suburban.

Detroit firmly believed that the cute-as-a-bug Vega and um, inexpensive Pinto would finally show those nasty, cheap, tinny little imports what for. Once again, the big boys in and around Detroit convinced themselves that they had dealt with a problem that would eventually go away, just like the last time.

Cigars were passed. Kool-Aid drunk. A reckoning was on its way.

When DaimlerChrysler unveiled Project X, the media was abuzz. Chrysler’s turnaround strategy included eliminating thousands of jobs, slashing vehicle production by a quarter and mothballing its Newark factory. More ominously, the plan pledged to consider “any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler." To tell the truth, DaimlerChrysler’s “Recovery and Transformation” document should have stated the management’s desire to explore “any option to pump and dump Chrysler.” Those alternatives are gradually coming into focus. First, here’s what’s not going to happen…

DCX isn’t going to spin off the Chrysler Group. Dresdner Kleinwort Wasserstein analyst Arndt Ellinghorst estimates DCX would have to cough up $11b to cover Chrysler’s liabilities before flotation. After deducting health care liabilities, Morgan Stanley’s mavens value Chrysler’s automotive operations at around $9b, and their financial unit at $7.6b. Spending $11b to jettison a company with a net value of $16b doesn’t compute.

Plan A: sell Chrysler to a private equity group. To that end, Chrysler’s German overlords have commissioned J.P. Morgan to prepare a prospectus for an eventual auction. Fresh from cherry picking GM (i.e. buying 51% of their GMAC finance arm), our three-headed pals at Cerberus are in the hunt. Apollo Management, the Carlyle Group and the Blackstone Group are also reportedly interested.

If an investment group ends up owning Chrysler, it’s only a matter of time (a week?) before they break up the MoPar Pentastar and sell the pieces– from existing inventory to entire assembly lines. Chinese carmakers (who couldn’t afford to buy the company) would be lining up for the Mother of All Garage Sales.

Plan B: sell Chrysler to an automaker. According to press reports, Hyundai, Renault/Nissan, VW, FIAT, Mitsubishi and (for all we know) Nikolai Smolensky have all examined the possibility of buying the Chrysler Group and decided there are better– or at least slower– ways to kill themselves. There’s only one automaker brave stupid enough to take on Chrysler’s bloated dealer network, lackluster product portfolio, deeply entrenched union and enormous employee-related liabilities: GM.

Think about it: the above description applies equally to GM and Chrysler. A merger between the two floundering behemoths is about as sensible as two escaped convicts intertwining their leg irons so they can float downriver past their pursuers.

And yet, GM CFO Fritz Henderson is heading a team to contemplate the “synergy” this “merger of dunces” would create. It’s no secret (at least in these parts) that GM doesn’t have the cash to simply sign a check (and seal its doom). That leaves one possibility: an equity deal. And as ridiculous as THAT sounds, the arrangement would give DaimlerMinusChrysler around a 20% stake in GM.

DCX management could save face with stockholders without losing “real” money. Chrysler Group would be “saved” by GM. GM would gain segment-leading minivans and Jeeps. And more dealers than a crack convention. And enough terminally ill product lines to keep automotive historians busy for decades.

None of this bodes well for Chrysler. Or GM. Or Daimler.

Assuming Porsche buys VW, DaimlerWhatever will become Germany’s smallest stand-alone automaker. Analysts at Banca IMI hint that equity investors and financially flush hedge funds are already sniffing around. Talk about irony: fending off a hostile takeover was one of the major justifications for the DaimlerChrysler “merger of equals.” Without Chrysler, Daimler Benz is right back where they were in 1998.

If Daimler found itself on the receiving end of a hostile takeover, the irony could be compounded. Industry analysts see Daimler stripped into pieces, split into separate car, truck, and van businesses. Of course, this is all speculation. But six months ago, who would have thought Chrysler would be on the auction block?

Despite the enormous implications of any change of ownership at Chrysler on the United Auto Workers (UAW), the union remains uncharacteristically quiet on the subject. The obligatory UAW press release on Chrysler’s 13k job cuts payoffs reads like boilerplate: “Today’s action by DaimlerChrysler is devastating news for thousands of workers, their families and their communities.”

When asked about the possibility that GM could “buy” Chrysler, UAW president Ron Gettelfinger responded “I have absolutely no opinion on that at all.” This despite the fact that many of his members see Chrysler’s "alleged" sale as nothing more than a “threat” (i.e. a ploy to gain contract concessions). Gettelfinger, who sits on DCX’ Board of Supervisors, was equally nonplussed about a Chrysler auction. "It may end up that it's not sold. Who knows?"

Fair enough. With all these (and more) potential scenarios, no one can predict what will happen to the once-proud Chrysler Corporation. DCX better be checking their six, though. In their zeal to rid themselves of their American albatross, they may be setting themselves up for a fall. You know what they say about payback.

Twenty-six summers ago I arrived in San Antonio, Texas. I quickly surmised that the pickup truck was River City residents’ favored mode of transport– preferably with an occupied gun rack. These pickup-driving Hill Country Texans worshiped at the altar of one of two churches: Chevy or Ford. Since those simple days of my youth, the rules of the game have changed. That community, so steeped in American pickup truck tradition, is now the production site for the all-new 2007 Tundra. Question: is Toyota’s big rig good enough to pry the keys out of the hands of F150, Silverado, and Ram-loving Americans?

Since the General Motors Death Watch began, GM employees, dealers and customers have emailed me their perspective on the General’s general degradation. Obviously, financial analysts are important (and confidential) contributors to this mix. While their info provides invaluable insight on the automaker’s slide into bankruptcy, their language can be daunting. So when I read this simple declarative statement in a recent investor briefing, I was shocked. “GM and Ford retail sales should continue their precipitous decline."

The numbers are bad. The Wall Street firm reckons GM’s February sales are set to drop 11%. That would leave the world’s largest automaker with a relatively paltry 23% share of the domestic market. Small, and unsustainable. According to The Detroit News, GM is currently losing $1300 on every vehicle it sells in the North American market. Toyota is making $2100.

The numbers suck, but the word is worse. “Precipitous;" as in “over a precipice.” As in free fall. Indeed, despite an endless stream of new product hype, the question is finally beginning to be asked: when and where will GM’s domestic misery end?

Although Rick Wagoner is the head of one of the world’s largest publicly held companies, GM's CEO has been stonewalling on this question since June 2005, when he announced the first round of production cutbacks and employee pay-offs buy outs. Unlike Carlos Ghosn, who set hard targets for Nissan’s turnaround, Wagoner has refused to commit to a defined– and thus measurable– corrective course. In other words, he’s completely unaccountable.

The American people aren't bothered. In fact, they're clueless. While amateur and professional pundits busy themselves debating GM’s fate, the average GM buyer doesn’t know/care about their transportation provider’s financial woes. They remain oblivious to the seismic rumbles foreshadowing the yawning chasm that’s about to open up and swallow GM’s business. At least that’s how things stood until last week.

Last week, the automotive press went slightly crazy. The possibility that GM would buy Chrysler unleashed a torrent of speculation about The Big 1.5. Aside from the frightening fact that Rabid Rick’s ego could be stroked with sufficient skill to get him to even contemplate such a preposterous move, and the millions in consultants’ and bankers’ fees paid to the strokers, the “GM wants Chrysler” media feeding frenzy was nothing more than a feeble distraction from a looming catastrophe.

The real action was going down at Daytona. During the Daytona 500 pre-race show, Toyota’s entry into NASCAR was a hot topic. Commentator Darrell Waltrip, who runs a Toyota truck in the Craftsman series, whose brother Michael operates a team that races Camrys in the Bush and Nextel series, was ready with a reply.

"Don't forget: the Camry is the only car of the four [Camry, Fusion, Monte Carlo and Charger] that's built in America. The Monte Carlo and Dodge are built in Canada and the Ford is built in Mexico. There are seven thousand people in Georgetown, Kentucky who build over three hundred thousand Camrys a year."

It was a defining moment in GM’s history. At a single stroke, the carmaker’s ability to wrap itself in the American flag was dealt a telling blow– in front of the very people to whom it matters most. By a man they respect and admire. This is our truck, this is our country. Uh-huh. Now tell me again what the Hell you boys are doing building Montes in Canada? Never underestimate the damage a company suffers when it breaks faith with its customers’ deeply held beliefs.

GM’s very own perception gap– the difference between the idea that they’re the home team and the company’s willingness to outsource automotive production abroad– is headed for extinction. It’s only a matter of time before GM is just another car company, just another once proud old line American business that couldn’t compete with faster, sharper and more intelligent competition.

The loss of patriotic identification is simply the continuation of a longstanding trend: GM’s diminishing stature. Fire Sale for All. Toe Tag Sale. Anyone with a pulse financing. Cash back. Imported Monte Carlos. At some point soon, the “average” GM customer’s understanding of GM’s place within the automotive firmament will evolve, from mighty power to beleaguered underdog to loser.

No wonder GM chose to pretend (perhaps even to itself) that’s it’s in a position to “buy” Chrysler (straight stock swap more like). Lest we forget, General Motors was formed by swallowing up smaller car companies. But this, well, this is a sad echo of a once great dynastic power’s ability to mow down all before it. The “Chrysler deal” is one last chance for GM’s power players to pretend that they’re calling the shots in the U.S. automotive market, rather than fighting a losing rearguard action against the barbarians inside the gates.

A recent post questioned the relative power of engineers and MBA’s in the automotive industry. A quick scan of corporate rosters reveals that the biz brains control most companies. The hierarchy makes sense; automaking is a business. Yes, but– whether their MBA's came from Harvard, Yale, or Vinny’s School of Business and Mortuary Services in Hoboken, the “suits” should know that too much unsold inventory is a bad thing. As a corollary, continuing production as unsold inventory piles up is a very bad thing. As in fatal.

Last year, Tommy LaSorda’s mob over at Chrysler put the theory to the test. At one time, the guys stuffed Chrysler’s “sales bank” with 100K excess vehicles. And there they sat, waiting for the dealers to catch up and cough up. After drastic production cutbacks and “if you’re breathing you’re approved” financing offers, dealers managed to whittle that number down to something a little less, um, dangerous.

The holiday break certainly helped; the two week shut down cut off the unwanted flow at the knees. As the sun rose on the New Year, Chrysler’s supply was closer to the industry’s Maginot Line: 60 days. The carmaker claimed a 51-day supply of 300's, a 68-day supply of Jeep Libertys and a not entirely horrendous 110-day supply of gas-guzzling Dodge Rams.

When production started again, inventory levels rose with tidal inevitability. In January, Chrysler averaged 14 sales per dealer. Dodge dealers dealt 28 sales apiece, and Jeep dealers averaged 13 sales per store.

The Chrysler Group then added an estimated 152K new cars to their inventory. And so, by the first of February, Chrysler/Dodge dealers sheltered a 78-day supply of 300’s, a 98-day supply of Libertys and a 111-day supply  of Rams.

Meanwhile, GM dealers are also choking on product. As of February first, GM’s “Like Always” brand (a.k.a. Saturn) had a 230-day supply of Ions (which is only 29K units, but there you go). GMC dealers were sitting on 20K or 211 day’s worth of Yukon XL’s, a 98% increase from January’s 113-day supply. 

And the hits just keep on not happening. In January, Buick dealers averaged just four new car sales per store. No wonder they have a 170-day supply of LaCrosses and a 116-day supply of Lucernes.

Ford can’t afford to laugh at their cross-town rivals. Mercury dealers only managed to move six cars apiece in January, staring down the barrel of 7K unsold Montegos (enough to last 147 days). Ford stores averaged just 35 sales each last month (mostly trucks), with 24K post-pre-Taurus Five Hundreds (a 169-day supply) going nowhere slowly. 

In a declining market with hundreds of available models, Toyota is the only transplant that seems immune to the temper of the times; they’ve got low supplies of, well, everything and an industry leading 126 sales per dealer.

Meanwhile, Honda holds a three-month supply of Elements and Ridgelines. Nissan can’t shift enough quirky Quests (144 days), Frontiers (122 days) and Maximas (113 days).

Even so, thanks to hot-selling Fits (25-day supply) and CR-Vs (19-day supply), Honda stores are cranking out 87 sales per dealer. While Nissan thanks its lucky Altima (51 days) and Versa (52 days) for helping dealers achieve 68 sales per month.

Mitsubishi? Not so good. The automaker started February with 3400 Eclipse Spyders (a 275-day supply). Relatively speaking, the Dodge-built Raider pickup is a hit. At the end of December, Mitsu had a 165-day supply. By the start of February, inventory had dwindled to 149 days. Of course, that’s still more than double the industry benchmark…

While manufacturers are quick to blame excess winter inventory on seasonal fluctuations, here’s the bottom line: unions.

Common sense says that when sales drop, you cut production. Unfortunately, the automakers’ contracts with the United Auto Workers (UAW) mandate that they must continue to pay their employees full whack even if The Big 2.5 cut back or stop production.

They’re caught in a classic Catch-22. Should they pay workers to do (and produce) nothing, or keep the lines running in hopes they might sell a few more vehicles?  Either way they’re screwed.

Rather than force a showdown with the UAW, automakers are going hey diddle diddle, straight up the middle. They’re paying the workers a big pile of cash up front to go away forever. Market share may be lost forever, but hey, they're gonna hit something and that’s the way it goes.

Even with the buyouts, supply continues to outstrip demand, leading to drastic deals. Buyers looking for bargains wait for the desperation sales and the cars’ reputations suffer accordingly. Brands become synonymous with “cheap”– regardless of product quality. Sales fall further as most consumers turn to undiscounted brands, figuring they must have higher quality. (There’s your perception gap.) And the production lines keep moving.

One way or another, it’s a death spiral that has to end. 

Henry Ford knew a thing or two about motivation. “Enthusiasm is the yeast that makes your hopes shine to the stars,” Crazy Henry opined. “The grip of your hand, the irresistible surge of will and energy to execute your ideas.” Yes, well, Blue Oval morale is at an all time low. After watching Billy’s Boyz lose over $24k per second, faith in The Glass House gang is fading. Faced with a failing grade on an interim report and a Way Fordward that needs to be Fixed Or Repaired Daily, Mulally’s masses are about as enthusiastic as Dick Cheney’s hunting buddies.

It’s true; not even Mercury’s curvaceous raison d’etre (a.k.a. Jill Wagner) could rally Ford’s troops at a recent USO show. In a survey included with FoMoCo’s recent NorAm report card, less than 45% of the 15k employees polled expressed faith in the new new turnaround plan. Ninety-three hundred respondents simply don’t believe that the vehicles within Ford’s “showroom of the future” have what it takes to pull Toyota’s next victim out of its tailspin.

The survey-sporting internal audit indicates that Dearborn’s darlings are missing their spending targets. Sales are still falling quicker than Mercury in the cold.  Save for one Edgey new product, January saw Blue Oval sales submarine expectations by some 10,600 units. 

The reason is (again, still) a “greater-than-expected segment shift out of pickups and SUV’s.” Look for a greater-than-expected 6k more units to litter dealer lots by the time Spring rolls around. For those keeping score, at quarter’s end, an additional 1.5 percent of Ford’s market share will have melted away.

The report also predicts that the first three months of ’07 will suck up lots of Big Al’s newly leveraged liquidity. The Blue Oval’s bean counters have been clamoring for 50% cost reductions. This month’s savings barely scratch 25%. What’s more (much more), FoMoCo’s spending will miss the bulls-eye again in March. You don’t need a magic eight-ball to predict that the highly touted “we’ll be fine in 09” is quickly becoming a [crack] pipe dream.

The negative results are clearly a blow for The Man from Boeing. The report reveals Big Al’s first fiscal kick at the can as a swing and a miss. Not to put too fine a point on it, Ford’s North American unit is still failing, despite Mulally’s humbly mutated metrics.

Unbelievably, despite Ford’s failing grades, cataclysmic losses, epic layoffs, plentiful plant closings and uninspiring products, market mavens have yet to abandon Ford. Right about now, Ford shares are up 5.6% from this time last year. In fact, Ford’s share price is at its third highest market value. Wall Street Journal (WSJ) scribe Robert Schwartz doesn’t get the math.

Mr. Schwartz estimates that even if Dearborn’s Darlings can convince the United Auto Workers to convince its members to slough 25% of Ford’s health costs, The Blue Oval will still be $58b in the hole. Factor in family assets like Mazda, the Premier Automotive Group, Ford Credit and Big Al’s mortgaged moolah, and you’ve still got six billion greenbacks in the debit column.

Note: FoMoCo’s MoCo is MIA from this list. And therein lies the problem.

Market mavens currently ascribe the automotive arm a value of $39.5b. That includes the $17b three-year cash burn just to keep Mulally’s motor runnin’.  To hit that valuation, the WSJ figures Ford needs a 4% pretax sales margin on $132b in sales.  That’s just to maintain the current downward trajectory.  A turnaround is going to be Ford Tough.

Based on the success at Nissan, turning this sum bitch around would require an operating margin of nearly 8%. Yeah right. It took Nissan six years and a Ghosn in the machine to get back in black, and Nissan didn’t have two 800-pound gorillas in the room: a bloated dealer network and a vapid product pipeline.  

So, basically, Ford’s employees are right to be shit scared. To date, the fact that the corporate coffers are full and the Hecho en Mexico Edge is firing on all cylinders are the only positive pegs for psychological hat hanging. Or… not.

Ford has just announced that they’ll cough up $500 in dealer cash on an entry level Edge. While the top-o’-the-line 18” clad SEL and SEL Plus cross-border crossovers are commanding sticker price, the entry level model is languishing. Unless this stock imbalance comes good, the glut of entry level incentivized SE’s could end up destroying the model’s overall resale values or worse, end up in rental hell.

Henry Ford may have been a vicious anti-Semite and a generally loopy guy, but he knew business basics.  “You can’t build a reputation on what you are going to do,” Hank famously pronounced. Unless and until Ford can live up to its promises, Henry Ford's corporate legacy is doomed. 

Californians designed it. Italy’s glass blowing artisans lent it their name. A Franco-Japanese alliance headed by a Brazilian CEO builds it in a Japanese factory. The Murano is a twenty-first century multinational mutt. Introduced in 2002, this strange beast has faithfully served owners in the great melting pot of America’s sprawling suburbs. In dog years, the model’s now 67 years old. And the CUV market has suddenly become more crowded than a backwoods puppy mill. So has Nissan’s crossbreed aged well, or is this old dog ready for the vet’s needle?

To capture maximum market share, does a car company have to forget how to have fun? Toyota seems to think so. The Japanese manufacturer has spent the last ten years purging its product line of irrational exuberance. It scrubbed the Supra in 1998, canned the V6-and-a-stick Camry CE in 2002, and wasted the Celica and MR2 in 2005. In that same year, another anomaly slipped through the cracks, a car that’s still with us today (at least for a while): the Toyota Corolla XRS. 

Since World War II, seeking national glory on the battlefield has become socially unacceptable. Countries now pour their national psyche into that great champion of industry: the car firm. As representatives of their homelands, automobile manufacturers live up to a national ‘meta-brand’, an image that is shared by its compatriots. National karma can now be read in meta-brands as if they were a pack of tarot cards.

Italian brands (Ferrari, FIAT, Alfa, etc.): hot, racy, and a little hydrophobic. French brands (Renault, Peugeot,Citroen, etc.): stylish, flamboyant and quirky. German brands (BMW, Mercedes, VW, etc.): technically proficient and austere, combining technical proficiency with a hint of condescension. America (Ford, GM): large, brash a bit dim-witted and powerful. Japan (Honda, Toyota, Nissan, etc.): reliable.

Building cars which do not conform to an established national stereotype is risky business. Honda, co-owner of the quality automobile mind space, tried to rebel against the Japanese meta-brand for anodyne family cars with the European-style NSX supercar. In spite of its impressive technical specification, the aluminium bodied mid-engined marvel never caught the market’s imagination. In 2005, the company sold 207 NSX in North American, while Ferrari found homes for 1,420 of their fragile steeds. 

The Germans "get it." VW knows its national meta-brand embodies an image of solid quality at a premium price (a fancy way of saying they overcharge us for a car made the way it should be in the first place). Facing an onslaught from Far Eastern value brands, VeeDub needed to offer products further down the price range that wouldn't sully its reputation for quality.

So, in 1986, they became majority stockholders of Spain’s SEAT. In 1991, they bought [what was then] Czechoslovakia’s Skoda. In both cases, the Germans were successful. They tidied things up a bit, slipped German platforms under foreign bodies and called it sehr gut.

The commercial logic of assembling brands to surmount meta-brand limitations suggests that there could be a great deal more cross-border portfolio building. By now, one would expect the Far Eastern brands to be sniffing round BMW and Porsche.

That that they are not doing so is partly because the newcomers are still far from reaching their potential. They do not yet have the means to be taking on the world’s automotive aristocracy. In any case, the feeding frenzy is going on elsewhere.

British brands deserve their place amongst the grandees of the industry. Yet the British meta-brand is deceptively multi-faceted. While the overall reputation is for conservative styling and country house interiors, the cars themselves seem to fit every niche imaginable.

Germany may make the best luxury cars in the world, yet Rolls-Royce is the most famous. Italy may have Ferrari and Maserati, yet both are eclipsed by the divine Jaguar E-Type. Jeep may be home on the range, but Land Rover rules an empire. Britain has a marque for every purpose. But the extraordinary thing is that the Brits are the very last to understand what they are about.

Take the [small cap] Mini. It’s one of the great British icons, whose launch supposedly heralded a small car revolution. Leaving aside some of the original model’s dead-end technology– such as the gearbox in the sump and the rubber-cone suspension– the only thing really wrong with the car was precisely what the British motorist considered its greatest asset: its diminutive dimensions.

BMW, however, saw the Mini as a kind of cute (if poorly built) sports car. When it designed a successor, the result preserved the sparkling ride and cheeky styling, but presented it in a much larger package. Unlike the original, the [all cap] MINI is now a major export success.

How about Rolls-Royce, perhaps the most imperious marque on Earth? The British believe quality comes with hand-crafting: building the cars like they were stately homes, complete with squeaky leather chairs and a gargoyle on the hood. Then there was Bentley, famed as the fastest trucks in the world. Both these brands are now in German hands– and all the better for some salutary lessons in quality standards.

This is not a story of British industrial decline; foreigners do not pick up British brands out of charity. But there is a caveat: the soggy little island can be a quagmire for the unwary.

Witness poor old Jaguar. What did Jaguar ever do to deserve lectures from Ford? As an underdog– or should I say undercat– Jaguar had the bravado to snarl at the opposition with inspiring designs. All that was lacking was quality, an area in which Ford were hardly qualified to provide advice.

And so the Yanks stuffed Jaguar so full with cash it grew corpulent and complacent. Ford is now on a crash diet. Perhaps that will be the lesson it can teach its British pet. 

In short, the deck may be reshuffled, but the wise automotive players know that the cards remain the same.

Trivia buffs, scholars of ancient history and encyclopedia-reading geeks know the first month of the year is named for the Roman god Janus. Janus didn’t have any special powers. His entire claim to fame was based on having two faces, one on the front of his head and one on the back. Since Janus could keep an eye on what was coming as well as what was going, he was placed in charge of gates and doors, transitions, and beginnings and endings. Being two faced also meant he could talk out of two mouths at the same time. Kinda like Toyota.

Toyota spends millions of dollars touting themselves as the automotive equivalent of the Sierra Club. They’re out to save the planet with their Hybrid Synergy Drive and put OPEC sheiks on the public dole with their fuel sipping econoboxes. They’re so magnanimous they’re sharing their hybrid technology with Ford and Nissan (and anyone else willing to pay the price).

Toyota’s even bragging that their new manufacturing plants will produce no waste to clog the landfills. Yes, the birds are singing in the trees and daisies are blooming in the meadows thanks to Toyota. And then there’s the Tundra.

Toyota makes no bones about it: they want to be a major player in America’s lucrative full-size pickup market. After years of twiddling their toes in the water with a size 30-slim Tundra, they finally cowboyed-up and built them a gen-u-ine giant. The new Toyota Tundra is every bit as gi-normous and gluttonous as the Dodge Rams, Chevrolet Silverados and Ford F150's it faces. 

And they’re promoting it heavily. Over three-quarters of Toyota's NAIAS stand was dedicated to the Tundra. The display featured the he-man image the Japanese automaker wants to associate with their mega machine. And you can bet the Tundra’s advertising budget will be equal to or greater than that of their tree-hugger specials. Combined.

Meanwhile, Toyota’s playing footsie with federal regulations. Their Texas-built pickup hits dealer showrooms in February– at the same time other manufacturers are beginning to introduce some of their 2008 models. But Toyota is adamant the new Tundra is an ’07. That’s because the U.S. government is changing the way they calculate the fuel mileage ratings for ‘08 model year pickups. 

The new procedures will make the numbers on the window sticker more realistic (i.e. lower). ToMoCo can’t risk lower numbers against competition’s higher-rated ’07 models. They’ll get to display the higher numbers for a few months before the (unchanged) ’08 models go on sale this fall with ratings 8 to 12 percent lower than the ‘07s.

As you can imagine, Toyota’s heavy emphasis on their new gas-guzzling leviathan hasn’t gone unnoticed by auto-oriented environmentalists. In fact, environmental groups are finally facing reality: their automotive eco-darling is (gasp!) nothing more than a business. A business that conforms to all CAFE regulations, of course,  but will do whatever it takes to make a profit. 

Some environmentalists are none-too-pleased to discover Toyota’s enviro-friendly posture was based more on marketing and profits than saving the planet. The greenies are indignant, and they're striking back. 

Backed by groups like the Rainforest Action Network, The Freedom From Oil Campaign (FFOC) has put Toyota on notice: no more “free pass.” According to an FFOC statement, the group's launching a new campaign designed to ensure that “auto makers are taking the interim steps needed to show that they are truly committed to fuel economy and not just good PR.” 

While commending Toyota for its past record for fuel economy, they’ve added the transplant to their list of targets. It may not be long before the FFOC organizes pickets outside Toyota dealerships, as they’ve done at Ford dealerships. The Toyota Tundra could become the tree-hugger's next lightning rod, replacing the (so-ten-minutes-ago) Hummer H2.

You have to wonder why it took environmentalists this long to see the light (heavy?). Toyota’s trucks have never been what you’d call “parsimonious” with petrol. The automotive press has consistently panned their two hybrid SUVs for their disappointing real world fuel economy. Once the 2008 testing procedures are in place, it’ll be interesting to see where Toyota falls on the charts and how the more realistic numbers will affect opinions of their greenmobiles.

As a company that exploits its environmental responsibility, Toyota can't be pleased to find the eco-radicals on their case. The company will have to spin like a whirling dervish to handle the fallout. I’m confident, though, that they’ll pull out all the stops to protect their green rep. I can see it now: “Clean air for oxygen breathers courtesy of Toyota’s Hybrid Synergy Drive and carbon dioxide for plant life by the Toyota Tundra. We have the ecosystem covered!” Janus would be smiling– on both sides of his head.

Hybrid cars are the automaker’s equivalent of straight teeth: everyone wants them. Carmakers without hybrids are beginning to look, well, a little unkempt. Not wanting to be perceived as a snaggletooth, Nissan joins the club with its new-for-‘07 Altima Hybrid. The company describes its first foray into gas-electric frugality as "the first hybrid that drives like a Nissan." The firm’s marketers clearly intend for Nissan’s self-fashioned sporting image to set the Altima hybrid apart from its key competitors. They’re also convinced, presumably, that consumers will know what this tagline means.

What the Hell’s a Suzuki’s SX4? I know it’s my job to know about these things, but I swear the test car greeting me upon my return from Old Blighty was the first one I’ve ever seen. If first impressions last, this tall, decidedly Japanese runabout says Subaru Forrester meets Scion xA on the suburban side of town. (In keeping with the parlance of our times, Suzuki shuns the “w” word and calls the SX4 a crossover.) A quick walk around revealed four big wheels, four big disc brakes, a Prius style double A-pillar and an AWD badge. Hmmm…? Could this sub-radar Suzuki be a sleeper?