Detroit looking forward to 2010 turnaround

The past decade hasn’t been a success story for any of the Big Three American automakers, and the past year has been particularly tough. But as new, more fuel-efficient models and revised union contracts come into play starting in 2010, Detroit thinks it has a future worth looking forward to.

Sales early this year have been slipping rapidly from the SUV and pickup-truck-focused market of the past
several years, with the share of SUVs slipping from 8.4% of the market in 2007 to 4.4% through the first half of May, according to The Detroit Free Press.

The lack of preparedness in the product lines at Chrysler, Ford and GM is somewhat surprising, given that fuel prices have risen and remained high since Hurricane Katrina in 2005. In a perverse turn of events, however, analysts think past failures may actually help the companies survive the present downturn because they were already responding - if several years late - to that downturn when fuel prices began their spike earlier this year.

Those restructuring plans have smaller, more fuel-efficient vehicles coming to the market and renegotiated UAW contracts that will save each maker billions in labor costs annually thanks to job cuts, early retirement buyouts of high-wage earners and new hires brought in at lower pay levels. With less overhead and a leaner, more marketable model line-up, the companies are hoping to be positioned much more profitably from 2010 onward.

GM’s Volt (concept pictured) plug-in hybrid is emblematic of the type of change the Big Three are working toward, and its 2010 goal for production availability should position it as a leader of the revival. Smaller and more efficient turbocharged engines are playing a role in all three makers’ more conventional offerings, and the industry is already preparing for the shift.

The next two years will continue to be tough, however, as current model lines expire, sales volumes continue to fall and more jobs are cut. Ford at least will also be cutting sales in the near term by as many as 350,000 units per year. GM missed out on nearly that much production thanks to the recently settled strike at the American Axle plant.