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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.
>>
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