General Motors (GM) has problems in the big pick-up end of its business and is looking at producing a minicar a the other end.
According to Reuters, GM (GM) and Ford (F) may both have double-digit losses in sales when they report March because everything from slow construction to high gas prices is eating into pick-up purchases. Even problems in sub-prime lending are causing more caution at banks, some of which are raising car loan rates.
The news is especially bad because pick-ups are among the most profitable products Detroit has.
While Ford is hanging onto Jaguar and other under-performing units, GM is at least working on designing more fuel efficient cars.
According to The Wall Street Journal, GM may introduce a minicar in the US. The vehicle would get 50 mpg. The BMW MiniCooper does well in the US, and sales of tiny cars may well improve if gas prices spike over $3 and stay there.
Detroit is not getting any breaks, so it will need to make more of its own. Toyota (TM) has come after the big pick-up truck market with its new Tundra, but its is offering incentives of $3,000 to get drivers into the vehicles. That may force the Big Three to drop prices on their pick-ups. It’s not a good cycle.
The US car companies have not come up with any authentic plan to get investors back in their stocks other than to say that they will "make better cars". That does not seem to resonate when their sales keep dropping so quickly.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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