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Gas prices put Detroit Big Three in crisis mode

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U.S. consumers are moving to hybrids, high mileage models at a fast pace

DETROIT - Detroit's automakers have been making the shift to more fuel-efficient vehicles, but consumers have been making the move even faster — to hybrids and high mileage models made overseas. Gas prices have accelerated the move away from trucks and sport utility vehicles at a furious pace, leaving the Big Three at the most critical crossroads in 30 years."In the early '70s, we were caught flat-footed, without smaller, fuel-efficient cars. We had nothing to sell," said Gerald Meyers, a former chairman of American Motors Corp. "That's exactly what's happening now."

What could make this worse, says Lehman Brothers auto analyst Brian Johnson, is that the Detroit Three can no longer rely on import restrictions or raising prices, which helped pull them out of the slump in the 1980s. And if gas prices stay high, they can't count on trucks and SUVs coming back, either.

"We believe that much of this reduction in full-size truck demand is structural, with many buyers downgrading to smaller vehicles who will likely not come back," Johnson said in a note to investors.

Pickup, SUV sales down

As of April, year-over-year sales of large pickups were down 17 percent and large sport utility vehicles were down 29 percent, while sales of subcompacts jumped 33 percent and the Toyota Prius hybrid was up 23 percent, according to Autodata Corp. The shift was exacerbated by a perfect storm of high gas prices — which soared 10 percent between March and April alone — as well as the weak economy, tightening credit and the slowdown in home construction.

There isn't likely to be much improvement in May. Himanushu Patel, an auto analyst with JPMorgan, predicted sales will fall 10 percent in May from the same month last year, and that General Motors Corp., Ford Motor Co. and Chrysler LLC will each see double-digit declines. Automakers report May sales Tuesday.

Despite automakers' earlier hopes for a rebound in the second half of this year, many analysts are now expecting the pain to last well into 2009 and even beyond.


                                               Look at the flowers

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In the words of a wise old sage...

Well, DUH! With gas prices jumping like they are, they're actually surprised that consumers are going to buy vehicles that use less gas? If they had realized it oh, say, a couple of years ago and shifted production of hybrids up, they wouldn't be having a slump now, would they? Dumbasses. *rolls eyes*

Yesterday was the deadline for all complaints!


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