American automakers shift from bad to worse

peakoil.com -> news.yahoo.com, reuters.com :

A miserable year for U.S. automakers General Motors and Ford Motor looks set to turn even worse in the aftermath of Hurricane Katrina. Sales of Detroit's most profitable models, full-sized sport utility vehicles, were already falling earlier this year. But a spike in gasoline prices to more than $3 per gallon after the storm threatens a sea change in the way American drivers make vehicle purchase decisions, ending a love affair with gas-guzzling SUVs that dates back to the late 1980s.

U.S. carmakers' heavy dependence on big SUVs amid stalling demand was a factor cited by the Standard & Poor's ratings agency when it downgraded the debt of GM and Ford to high-yield, or "junk," status in May. The auto giants, weakened by their seeming inability to sell enough cars without the use of profit-eroding discounts, have also been struggling under the burden of soaring costs for everything from health care to raw materials.

Lee Iacocca, who led Ford in the 1970s and is credited with saving Chrysler from extinction in the 1980s, summed up the grim mood in Detroit when he visited his adopted hometown last week and chided its automakers for lagging the Japanese in developing fuel-sipping hybrids. "They should get off their asses and build more hybrids," he told The Detroit News. "Something's got to happen in this town to turn it around, or we're all going down the tubes," Iacocca said.

(2005-09-20 07:08:03 SGT) [Biz] Permalink Comments [2]

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