In a recent article, The Economist wondered if Detroit's automakers would win their "race against time." In other words, will Ford, GM or Chrysler return to profitability before their cash conflagration throws them into the Chapter 11 burn unit? At the risk of providing a piercing glimpse into the obvious, The Big 2.8 need to change course or flame out. STAT. The Economist rightly suggests that Ford is the only carmaker of the three with a coherent strategy for escaping C11. For contrast, let's recap GM's and Chrysler's plans…

GM's roadmap: pare structural costs out of its bloated North American installed capacity until they can replace high profit light trucks with… something. To that end, The General's axing people and factories like they're going out of style (which they have), costing the company billions. The overarching problem: GM's market share and revenues are falling faster than the cuts. GM might be able to scrounge additional capital, but that's merely delaying the inevitable.

Chrysler's plan: become a distributor of cars made by others. Someone. Anyone. Aside from the fact that it won't work– branding still counts for everything– the outsourcing effort can't happen soon enough to save the company. Chrysler's product-related income stream is evaporating faster than a Texas rain puddle, and owners Cerberus have no hope (and no intention) of raising (or providing) sufficient capital to transform Chrysler into a viable carmaker, rebadged products or no.

In a nutshell, GM's still in denial, bleeding a slow death (in North America), while Chrysler is running around like a headless chicken, running out of money.    

Meanwhile, Ford's been executing a focused, determined and sensible new new turnaround plan since the arrival of the aluminum-winged savior from Boeing.

Alan Mulally's strategy: transform Ford into a smaller, more nimble company by leveraging its global resources (which are mostly smaller vehicles in Europe) to reduce platforms and costs. Build quality products in North America (as done by Ford Europe today) offering excellent fuel economy and class-competitive value for money.  

It doesn't sound crazy, and it might just work. But there are more than a few hurdles Mulally and his Blue Oval Boys must jump before they can beat their cross-town rivals to the "no C11" finish line.

First, Big Al must break down Ford's bloated bureaucracy and legendary in-fighting. No more individual unit fiefdoms. Intra-national waste and duplication of effort must be ruthlessly eliminated. Consolidation must be pursued without fear or favor.

Big Al's got to look outside Ford for expertise where needed. This he's done, hiring marketing whiz Jim Farley from Lexus and Ken Czubay (U.S. Sales and Marketing Chief) from Southeast Toyota Distributors. The more top-notch outside talent brought on board Ford, the better.

Second, Ford's got to jettison those parts of the company that don't fit to the global strategy. Throwing Jaguar/Land Rover and Aston overboard was the right thing to do. Volvo can't be offed soon enough.

Third, Ford's got to develop a profitable product plan for North America.

Ford's newfound commitment to smaller cars, more efficient engines and better design makes perfect sense. The new Fiesta and Euro Focus are overdue, but they will be welcome. When the company restyles the Taurus and drops the Freestyle, we'll know they're getting their you-know-what together. Turbocharged engines also make sense: more horsepower, better fuel efficiency.  No wacky bets on unproven electric go karts.

Finally, Ford must challenge the entire organization to perform to stated goals. They must energize the engineers, design staff, factory workers and dealers with their plan. And when I say Ford, I mean Alan Mulally.

The importance of leadership in a crisis can never be overstated. GM's got the same old tired financial guy trying to make it look like he's addressing the problem without really solving the crux of the matter. Chrysler's in the hands of the Home Depot despot– a proven cost-cutter who lacks any feel for the customer experience. Only Ford's Mulally has the skills– and credibility– to successfully energize his troops.  Kind of like the way he brought the B-777 to fruition.

Even so, there's no getting around the possibility that Ford may, indeed, run out of time. They may not get the small car products they need to the North American market soon enough. (Not to mention the possibility that those hecho en Mexico products may not be popular enough to generate those now-elusive profits.) The fact that Ford has withdrawn its "return to profitability" deadline is worrying.

But at least Ford has its eyes on the prize. Mulally may not know exactly when the ship will stop taking on water, but he knows Ford's got to get rich or die trying. He's laid out a viable plan, and he's sticking to it. Every Ford employee, supplier, and dealer knows the plan. We know the plan. 

John Lennon observed that "life is what happens when you're making other plans." But genuine progress is only possible when you realize that you must adapt or die.

Although Ford only makes about $100 from each Focus it currently sells, The Blue Oval Boyz plan to bank big bucks from small cars. At a dinner with journalists last night [Ed: our invitation must have gotten lost in the mail], Ford Americas President Mark Fields said the small car segment is at "critical mass" and that Ford's "eager to tap it." The Detroit News reports that the formerly mulleted Mulally minion stated "we'll see a bigger smaller car segment," and wistfully added FoMoCo wants to start charging premium prices for small cars. And how will they accomplish this goal? With "exciting designs, best-in-class fuel-economy, excellent craftsmanship and innovative new infotainment technologies." And even though the Fiesta will be hecho en Mexico, the Mother of All Union Payoffs (a.k.a. the health care VEBA deal) will save Ford enough money that they can finally build small cars at a profit. Of course, the first thing they have to do is convince the average American small car buyer that a Ford small car is worth the same money as a comparable model from Honda or Toyota. [Ken Elias' Ford Death Watch later today.]

It's never a good idea to let journalists loose on a prototype. Even the tamest of the breed feels obliged to point out the vehicle's deficiencies. In this case, AutoWeek's Hans Greimel flew to Japan to test Nissan's gas – electric Infiniti G35. Needless to say, it didn't fail to disappoint. "During a prototype test drive for journalists last week in Japan, the hybrid car suffered awkward lags when the engine kicked in to help the electric motor. Deceleration also was jerky because of battery regeneration. 'We still have a few issues with this development vehicle,' says Tatsuo Abe, manager of Nissan's hybrid engineering unit." News-wise, Nissan hasn't decided which Infiniti to hybridize, but it won't try to out-mpg the Prius. "Toyota is the current leader, and one of our intentions is to approach hybrids from a different angle," Product Veep Atsushi Shizuta told AW's Man in Japan. "This is as much about power assist as it is about fuel economy." Hans sees the flaw in that one. "Honda pitched the performance of its Accord Hybrid sedan but dumped the model at the end of the 2007 model year after lackluster sales. Honda is now planning a hybrid Fit small car, which should achieve excellent fuel economy." 

TTAC's Best and Brightest have spoken. You provided us with 81 nominations for our Ten Best award, from the Aston Martin Vanquish to the HUMMER H2. From this cornucopia of cars, our ever-eager writers selected the short list of 20 finalists. As you might expect, the final list leans heavily towards vehicles notable for their performance and driving excellence. Half of this year's contenders were also finalists last year [indicated by an asterisk]. So here they are, along with some of your more "colorful" comments. Once you've had a look, please step into the e-voting booth and choose TTAC's Ten Best.

Henry Ford said "You can't build a reputation on what you are going to do." Someone forgot to tell Bennie Fowler, Ford's group vice president of global quality. The Detroit News reports that Fowler stepped up to the microphone in front of his peers and started playing the dozens with the quality king. "In a direct challenge to Toyota… Fowler told industry leaders at the Center for Automotive Research's annual Management Briefing Seminars that new European- designed compacts and subcompacts such as the Fiesta and Focus will roll off the line with an average of 800 things gone wrong per 1,000 vehicles." If Fowler can meet that ambitious target, it would place Ford's quality above Toyota's– at least in this metric. Yes, well, apparently The Blue Oval Boyz are headed for one of those fist-pumping moments. "This time, we're playing for all the marbles — and we aim to win." Note to Bennie: must follow Crazy Henry's dictates. Such as, "Quality means doing it right when no one is looking."

You know Houston is a town riding high on oil revenue when the local Lamborghini dealer invites members of the media to gawk at their latest inventory. Seeing the LP560 up close and personal and getting my fingerprints (oops!) on the Reventón was fun. And it turns out that Lamborghini Houston is the world's volume leader for the Reventón, cornering 20 percent of market. So they're stacking 'em deep and selling 'em cheap? Not at $2.5m they're not. The Gallardo is a different story: Lamborghini is reacting to market changes faster than anyone expected. Without the restrictive "list" of their Maranello counterparts, Lamborghini faces a glut of '08 Gallardos languishing on dealer lots. The days of easy money are gone, and used Gallardos' resale value keeps new car demand low. So the Raging Bull now only produces LP560s after customers buy them and keeps costs to a minimum with a fancy-schmancy IT infrastructure. (Thanks, Audi!) The customer specs their Lambo via plasma screen in the dealership's ritzy lounge, and the money saved goes to customer-grabbing promotions like shows and racetrack events. And unlike the tsunami of Tundras threatening Toyota's sales numbers, nobody in Bologna fears underproduction. That's just more time for the craftsmanship, baby.

ToMoCo's fears of "big company disease" seem most credible when looking at its non-Toyota brands. While Scion fails to capitalize on increased demand for smaller, more efficient cars, Lexus is struggling to adjust to the changing market conditions. Automotive News [sub] reports that Lexus has relied too heavily on SUV and crossover sales, allowing its car offerings to wither on the vine. The IS isn't due for a restyle until 2012, the GS and ES models are two and three years away from redesigns respectively, and the aging SC430 is [still] dead in the water (1,373 sales year-to-date). On the performance front the GS-F's on hold and the LF-A development project has failed to hit performance benchmarks in line with its $160k price tag. Delaying the LF-1 production model until 2010 seems a foregone conclusion. Even then there's no guarantee that there'll be a market for Lexus' halo model. No wonder, then, that Lexus is amping-up its hybrid options. Not only does "the power of H" give the brand unique cachet, but it also returns hefty profits on ToMoCo's hybrid platforms, helping the Japanese automaker drive down costs on Toyota-branded hybrids. 

The inventory levels and average sales per franchise (SPF) numbers as of August first are out and almost everyone looks good on the car side of the inventory sheet. Trucks are a whole ‘nother matter, though.  Dealers are doing whatever they have to– including half price sales– to move body-on-frame trucks but inventory is still piling up. Just how bad is it? Well, let's take a look… 

Chrysler has fewer vehicles sitting around than at the same time last year, but sales are so bad that "abysmal" would be an optimistic appraisal. In July, Chrysler sold only seven vehicles per franchise (SPF). Jeep was marginally better with eight SPF, while Dodge sold 20 vehicles per franchise. High inventory numbers reflect those low sales. Jeep dealers have to contend with a 168-day supply of Liberty, a 156-day stock of Wrangler and 118 days' worth of both Compass and Grand Cherokee.

Dodge is even worse. While their passenger car inventories are at manageable levels, they have enough Rams for 111 days, enough Journeys for 132 days, enough Nitros for 224 days and– get this– enough Durangos to last 354 days. Chrysler franchisees don't have a lot of room on their lots, either. The 300 inventory represents 116 days of sales, and they have enough Town & Countrys and Aspens to last 111 and 158 days respectively.

Ford dealers are faring better, moving 37 units each. Lincoln and Mercury peddlers didn't fare so well, selling six and four vehicles each respectively. FoMoCo inventories looked pretty good on the car side, with only the MKZ and Milan into three digits (102 days for both). Ford's car-based CUVs are doing well– except for the Flex's 134-day supply. Dealer stock of body-on-frame trucks– F-Series (107 days), Explorer (111 days) and Expedition (125 days)– are piling up. The stalwart Ranger is looking good, with a mere 68 day supply.

Saturn leads the GM dealer hit parade with 41 average sales per franchise, followed not too closely by Chevy dealers with 34 sales each. After that, GM's SPF stats drop it like its hot. GMC franchisees managed to sell just 12 trucks each. Hummer dealers somehow got 11 units each out the door. Pontiac dealers averaged 10 vehicles. Cadillac and Saab dealers tallied nine sales each, while Buickmongers only eked-out three sales apiece in July. 

With a few exceptions like the LaCrosse (121 days), Lucerne (125 days), and Corvette (145 days), GM's passenger car inventory looks pretty good. But, like everyone else, traditional trucks are available in abundance. The three Escalade models average 152 days. Every Chevy truck with exception of Tahoe is in the triple-digit club, with Avalanche leading the parade at 156 days. The Tahoe barely escaped membership with a 98-day supply on the lots. All of the GMC SUVs and pickups are well over the hundred-day mark. 

The Big 2.8 aren't the only ones sitting on oodles of trucks. Honda dealers have a 111-day supply of Pilots and a 127-day supply of Ridgelines to unload. Acura dealers have a similar excess of MDX (120 days) and RDX (113 days). On the positive side, Honda dealers managed to sell 81 cars and 42 trucks per franchise, while Acura dealers moved 30 cars and 18 trucks each.

For some reason, Toyota won't break their inventory down by model. All we know is that Toyota/Scion dealers started the month with a 29-day supply of cars and a 99-day supply of trucks, while Lexus dealerships had 42 days' worth of cars and enough trucks for 60 days. Toyota placed first in sales per franchise, moving 94 cars and 49 trucks each in July. Even with the economic downturn, Lexus dealers averaged 60 cars and 40 trucks each.

Nissan follows the same inventory trend as the rest of the industry. The only Nissan cars exceeding the ideal 60-day inventory level are the Maxima (62 days) and 350Z (182 days). The inventory report also shows 600 GT-R's in the U.S…. somewhere. Trucks look surprisingly good, too, except for Murano (134 days), Armada (143 days) and Titan (down from 489 to 144– does anyone else smell massive fleet sales?). Nissan's 47 cars and 34 trucks SPF placed it fourth overall, behind Toyota, Honda and Lexus.

Other manufactures show similar numbers. Mazda has a 46-day supply of cars and a 108-day supply of trucks. Mitsubishi follows suit, with 65/125-day averages.  Hyundai and Kia dealers are sitting on a 42-day supply of cars and a 61-day supply of trucks. Hyundai dealers sold an average of 52 vehicles each, while Kia dealers pushed 43 units out the door in July. Mazda moved 33 vehicles per franchise while Mitsubishi dealers managed 19 sales each.

You can expect these inventory numbers to fluctuate quite a bit over the next few months, as manufacturers continue to adjust production mixes to cut back on trucks and increase cars. Sales per dealership seem to remain fairly constant, moving maybe one or two places in either direction from month to month. As always, we'll keep an eye on them and let you know what happens.

Press releases aren't supposed to be funny, but occasionally, one comes out that you can't help but laugh at, either for the product it's promoting, the way it attempts to make it sound unique, or both. Case in point: Toyota's release describing the "Design Ins and Outs of the 2009 Toyota Venza." Having seen pictures of this bastard child of a Camry and an Aztek, I think it would be better described as the "Design Do's and Don'ts," with emphasis on the don'ts. They struggle to find a way to describe it, settling on "not an SUV, not a wagon, not a coupe and not a sedan." So what the Hell is it? They say it "incorporates SUV utility and roominess, while maintaining passenger car essentials, such as ease of ingress/egress, performance, a lower, sleek side profile with aerodynamic lines." Uh… doesn't that pretty much describe a station wagon? Anyway, the design incorporates "Toyota's design philosophy, ‘Vibrant Clarity'" (which sounds like a Honda FCX with a tire out of balance) to produce "look-at-me" styling. Inside, it has a "floating…60/60 center dashboard" that makes spatially-challenged drivers and passengers "feel as if 60 percent of the space is in their personal zone."  There's more, but I'll let you read it for yourself.

Click here for PDF of press release.  

If you're a manufacturer with operations all over the globe and a model is bombing in one market, what do you do? You send it to other markets to see how it fares. At least that seems to be Toyota's plan for the Tundra and Sequoia, according to Steve St. Angelo, president of Toyota Motor Manufacturing Kentucky Inc. Automotive News [sub] reports he stated today that the humongous "trucks could be attractive to overseas buyers." They have to do something to reclaim their investment in design and manufacturing as they aren't selling here. They halted production on both last Friday to try to clear an inventory backlog, with plans to resume production – most likely at a greatly reduced rate – in November. St. Angelo didn't say just where they plan to sell these gas-sucking mega-trucks, or who they think will buy them, but I have a feeling Europe and Japan are pretty low on their list.

“Hot enough to boil a monkey’s bum!” I don’t know exactly what that means, but it was that hot in North Texas the afternoon I picked up my 2008 Scion xB. How appropriate that the old Flying Circus reference should flash through my mind; the xB looks like something out of a twisted Terry Gilliam animation. Now that Graham Chapman resides in an urn, all of the Pythons could fit in the xB, although 6’4” tall John Cleese would be uncomfortable in any seat.  But the newly redesigned boxy Scion is more than a surreal comic sketch. Or is it? And now for something completely different…

And here it is [maybe]: Chevrolet's plug-in electric – gas hybrid Volt. Weʼve admired (more or less) the widely-touted concept and glimpsed the camouflaged 1/3 model. Iʼve photchopped my personal guess for the finished model, based on Bob Lutz' contention that the production version will still be recognizable as the Volt. The small cabin silhouette is clearly not making it into production (as we've seen on the scale model). However, the doors' transparent upper sides are a Volt-specific design element; I think they could make it out of concept stage to act as a visual trade-mark. They're not all that useful, but they give the Volt a suitably high-tech appearance. Some mechanical components like the door-locking mechanism or the window crane could be seen through that glass; eye candy for kids and first-time car-thieves. I kept the glass-roof, but I doubt it will be standard equipment. Some high-tech lights (but not as fancy as those seen on the concept) should differentiate the Volt from the rest of the Chevys. The result isn't beautiful, but then, neither is the Toyota Prius.

[More of Andrei's photochoppistry at avavarii.com ]

Even though Autosavant's J.S. Smith is "hardly a snarky, cheer-as-the-Titanic-sinks sneerful spectator," he's more than willing to lay into GM hard when they deserve it. And the decision that prompted Smith to assert that "trained monkeys could do better than the crumb-bums in the RenCen," is certainly worth the vitriol. Smith takes GM to task for deciding against bringing the Chevy Beat stateside. With Toyota bringing a five-door Yaris to the states, and Ford Euro-sizing, not bringing on the Beat "qualifies as less a business move than a bowel movement," says Smith channeling his inner Farago. He also notes that revealing the Beat in New York and asking Americans to vote for a favorite between the Beat and its Trax and Groove siblings was disingenuous at best. Considering that the Beat was handily the people's choice, the move is just plain suicidal. "Not only was GM being idiotic in its decision to not have the Beat available for sale in the US in its first generation when consumer demand for small, efficient vehicles is at a fever pitch, but the company was also dishonest about its intentions and plans for the small cars with the public… This is how you go from a 50% market share to under 20% in a generation." Well said, sir. And welcome to the "snarky, cheer-as-the-Titanic-sinks sneerful spectator" club.

Toyota is beginning to feel The Big 2.8's pain. The world's largest automaker released their first quarter financial results. No question: they got dinged. While ToMoCo's books are not in the same universe as GM or Ford, the Japanese carmaker's operating profit dropped 39 percent to "only" $3.8b. That's just over half of the $6.2b they showed for the same quarter last year. Toyota Exec VP Mitsuo Kinoshita attributes the losses to a number of factors, including the weak U.S. dollar and the soaring price of raw materials. He's not too concerned over lease residuals and dropping used car prices, though. "With Toyota's traditionally prudent approach in lending, together with its efforts to further strengthen the credit control and collection system, the percentage of credit losses has shown some stability. As for residual values, Toyota will continue to keep a close eye on the used car market and set suitable values in a timely manner." This is the second consecutive quarter their operating profit has dropped. [source: Toyota Press Release]

Click here for First Quarter Operating Results and First Quarter Financial Summary

July's temperatures may have been hotter than Hell, but U.S. new car sales were in Hell. Rising gas prices have thrown the entire American auto industry into turmoil, flooding the market with used SUVs and pickups, cratering residual values and trapping millions of consumers in light truck limbo. At the same time, automakers can't ramp-up production quickly enough on those fuel-sipping models that are leaving the lots. Incentives aren't moving the metal, but NOT increasing them would be worse. The downturn is widespread. And despite what the automakers say, it's going to get worse. Soon. For now, here's the damage report. 

Overall, U.S. light vehicle sales were down 13.2 percent from last July, down 10.5 percent overall from last year. That breaks down into a 0.3 percent drop in passenger cars and a 25.8 percent drop in truck sales. Year to date (YTD), car sales are down only 1.5 percent. But Detroit's still-truck-centric Big 2.8 are taking it on the chin, with truck sales off by 19.3 percent. 

Family Sedans

Chevy's Malibu* continues its strong showing against last year's lackluster model; up 78.6 percent in July and 37 percent YTD. Ford's Fusion also booked a healthy increase, up 13.5 percent for the month, 11.9 percent for the year. Chrysler's 300 continues its slide into the dumpster, dropping 57.6 percent below last July and 39.1 YTD. The Toyota Camry* leveled off, finishing July 1.5 percent; it's a wash YTD. Honda Accord sales continue to outpace last year, finishing the month 11.4 percent ahead and 12.6 percent better YTD.

Compacts

Compacts' popularity continue to soar. The Chevy Cobalt was up 3.5 percent, 16.4 percent YTD. The Focus is once again Ford's most popular car, racking up 15.6 percent more sales, up a full 26.2 percent YTD. The Dodge Caliber bucked the trend, dropping 9.4 percent for the month, down 1.2 percent YTD. The Toyota Corolla** increased sales by 15.9 percent, but fell down 1.3 percent YTD. The Honda Civic* was up 4.6 percent, 16.1 percent YTD. The Nissan Sentra finished the month up 16 percent, 5.3 percent YTD.

Subcompacts

The up-and-down Chevy Aveo was up 16.9 percent ahead of last July, but only 1.4 percent YTD. Toyota's Yaris showed a  6.1 percent increase for the month and a 34.1 percent jump YTD. The Honda Fit also experienced a meteoric rise. Sales were up a staggering 93.4 percent in July, 72.9 percent YTD. Nissan's Versa rose 14.4 percent above last July, up 19.6 percent YTD.

Prius

Toyota Prius ' demand continues to outstrip supply. Sales in July were down 8 percent from last July.  Annual sales are down 3.9 percent.

Pickup Trucks

And now the bad news… Chevy's Silverado* plunged 29.8 percent from last July, down 26.1 percent YTD. The Ford F-Series isn't doing quite as badly. Sales off 20.6 percent on the month, down 22.4 percent on the year. Even with dealers running half price sales, the Dodge Ram sank 27.2 percent, down 30.0 percent YTD. They're all doing better than the Tundra. ToMoCo's full-size pickup dropped 42.1 percent from last July. Sales are down 15.2 percent from last year.

Truck-Based SUVs

There's only one thing that can make pickup sales look good: SUV sales. Chevy's Tahoe* is down 35.1 percent for the month, off 27.8 percent YTD. The Ford Explorer has lost its way, finishing the month down 51.8 percent, minus 35.6 percent YTD. The biggest loser: the Durango. The Dodge Boys sold all of 384 units in July. Sales tumbled 84.5 percent, down 51.3 percent YTD. Toyota Sequoia sales continue growing, with an increase of 62.9 percent from last July, up 32.8 YTDr.

CUVs

The once and future Next Big Thing wasn't. Sales of the GMC Acadia, the best selling of the Lambdas triplets (soon to be quints), dropped  5.2 percent. Healthy sales from earlier in 2008 kept the model 6.6 percent ahead of last year. The Ford Edge continues edging down, dropping 6.5 percent. Again, it's a recent phenom; sales are up 13.8 percent YTD. Even with a hybrid model available, the Toyota Highlander* dropped to its lowest level in three years. July sales slid 23.7 percent, down 7.4 percent YTD. The Pilot made a strong "contribution" to Honda's 22 percent drop in truck sales; it was off 43 percent, down 21.1 percent YTD.

By Manufacturer

Deep breath. GM sales plunged 26.1 percent for the month, down 17.7 percent YTD. Ford had the best showing of the D3, dropping "only "17.1 percent. Year to date, they're off 14.8 percent. Chrysler didn't have a lot to start with, but they still managed to finish 28.8 percent below last July. For the year, ChryCo is down 22.8 percent. Toyota's starting to get used to the negative side of the sales ledger, falling 11.9 percent, down 7.6 percent below last year's mark. And, showing they're not invulnerable, Honda lost 1.6 percent from last July. They're still 3.2 percent ahead of last year.

Down the Road

Here come the "please God clear this lot of '08s" rebates and  incentives. While Toyota, Honda and others are selling all the small cars they can produce, GM, Ford and Chrysler can only respond to current demand with the promise of new, highly competitive small cars. They won't come on-stream in force until 2010. Meanwhile, August is going to be brutal and then… winter. What's beyond brutal?

*Include Hybrid models
** Includes Matrix