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Big 3's fed loans only 1st step
Demand for new cars and trucks is downshifting with each passing month. Orders for durable goods slumped 4.5 percent in August, the Commerce Department reported, and Wachovia Bank estimates that U.S. car sales for September are likely to slump to an annual selling rate of 12.9 million vehicles, down from 16.1 million in the same month last year. 'Overall, given the uncertainties in the financial markets and continued tightening of credit standards, auto sales could fall below our annual expectation' of 14 million cars and trucks, Wachovia said in a report Thursday. 'The upheaval in the credit markets increases the likelihood that 2009 industry sales will decline.' Wonderful. As harrowing as the past three years have been for Detroit's automakers, their suppliers and the communities that depend on them, the fact is that next year is shaping up to be perhaps one of the toughest years yet -- perhaps the sternest test so far of the ability of GM, Ford and Chrysler to stay in business, stay their rocky courses of transformation and stay out of federal bankruptcy court. Lord knows, the next administration won't hunger to preside over the complete bankruptcy of the American-owned auto industry any more than Detroit's dealers and the United Auto Workers would relish the prospect of seeing generations of franchise agreements and labor contracts rewritten through bankruptcy. But the past two weeks show how brutal (and swift) economic forces can be, especially when each force seems to be marching in the wrong direction at the same time: Sales down. Revenue sliding. Gas prices high. Consumer confidence off. Shares sideways. Too many trucks, not enough cars. Credit tight and credit ratings in the tank. Profits at home non-existent and softening abroad. This week's electric vehicle counter-offensive -- first by Chrysler, with its plans to electrify its entire fleet, then with GM making official its plans to build the Volt engine in Flint -- is a necessary step in the right direction for an industry struggling mightily to be considered a contender in the fuel-efficient vehicle sweepstakes. But it's not sufficient. More, it has the eerie feeling of a cranky heart patient running on a treadmill because he has to, not because he wants to. The simple fact is that Detroit's Big Three -- with the arguable exception of Ford's Escape hybrid SUV -- embraced the religion of fuel efficiency across its product lines only when circumstances (and the lure of federal dollars) demanded it. Implicit in the federal loan package, it seems to me, is a message from Congress and their constituents: Get it right this time because there may not be a next time. Daniel Howes' column runs Tuesdays, Thursdays and Fridays. He can be reached at (313) 222-2106, [email protected] or detnews.com/howes. Catch him Fridays with Paul W. Smith on 760-WJR.