It's official - U.S. auto industry IS back to the 70's
Honda announced that early 2009 it will offer hybrid cars costing $1900 more than the same gas models. Industry analysts, as I mused yesterday, said that the cost to the Big Three could be (will be I think) lower market share as consumers continue to shift to smaller efficient models. The 70's oil shock opened the way for Japanese car makers to take a major share of the U.S. market despite oil and gas prices that fell for years afterwards. Analyst for Edmunds.com stated that "It's a game changer for the short term if they can get the products in the marketplace in the next couple of years before the domestics can come up with a significant volume of products that get high mileage".
If they can get the products? Hondas new models include a gas-elecric hybrid only model that goes up against the Prius and a hybrid verson of the Fit. Honda's President says the new models are a key part of their strategy for the next 3 years. They wil also introduce hybrids for the Civic and CR-Z. Just as in the 70's (apologies to thse Fools who dislike that era) this increases the problem the Big Three had then, the market shift to small cars when they're known for making trucks and SUV's.
GM and Ford are relying on their European and Asian operations for small car expertise, according to CSM Worldwide. Chrysler has a few small cars but has signed a deal with Nissan to produce cars in 2010. Unfortunately, GM's focus is putting hybrids in their larger vehicles. It doesn't sound like the plan needed to overcome a very focused Toyota and Honda. The Big Three won't thrive by trying to sell all the SUV's they make to the mideast. Americans can't sell their used ones at almost any price.
The 60's and 70's generation remembered the lesson well and created the small car boom. The same will happen with today's even more environmentally focused generation.