GM's Bond Status hovers above junk

When the gas lines of the '70s inspired many Americans to buy smaller, more fuel efficient Japanese cars, the American auto industry lost more than just serious market share, they lost brand reputation.

FORD, a Honda dealer once told me, stands for Fix Or Repair Daily, and in the 70's and 80's that statement represented the truth. Still, Detroit had one auto up its sleeve, the SUV.

As gas prices returned to normal, Detroit fervently marketed the gas-guzzler as a symbol of American freedom against the small, efficient Japanese compact and made great profits. Then the rollover scandal, global warming, and the War on Iraq followed, and the profitability of the SUV waned for Detroit, leading to huge discounts and incentives to push a gluttony of inventory.

This worked for a while and because General Motors and FORD hold so much corporate debt, they were able to sustain profits off bonds.

This week; however, GM had its bond rating lowered to just one notch above junk status, and analysts are warning that if business for America's leading automakers doesn't pickup soon, the situation will get much worse.

"The auto companies really need to do something to turn this around," Eaton Vance Corp. analyst, John Croft, recently told the Wall Street Journal.

Complicating the matter, gas prices continue to rise, but it's not just the increased cost of gas this time.

Global pollution and dependency upon foreign oil have become "buzz" phrases for even the average American consumer. More importantly, they have become buzzwords for the biggest auto-market in the world, China.

"Using conventional internal combustion engine technology alone will be a source of huge pressure in terms of energy, security, and environment," president Wan Gung of Shanghai's Tongii University told attendees at the Challenge Bibendum in China.

Therefore, China is seeking to be leader in new automotive technology, focusing on fuel cells and hybrid cars.

While GM has signed deals to make fuel cell buses in China, Toyota has signed deals to sell it's popular Toyota Prius hybrid car in China - a move offering much more profit than one bus.

Since GM and FORD took a 'wait-and-see' attitude on hybrid cars, they can make no such offering. Even FORD's Escape Hybrid SUV was developed utilizing leased Prius Hybrid technology.

As an American, I hope that Detroit can survive this revolution in the auto industry, as many American jobs are at stake.

Still, as an American, I demand the kind of freedoms that reducing oil dependency can provide, and I expect American companies to be as concerned about these freedoms as I am - maybe even more.

Unfortunately, when it comes to be 'American', American automakers have a long way to go.