http://www.forbes.com/business/forbe.../0411/107.htmlAuthor Jerry Flint

Backseat Driver
Don't Believe It
Jerry Flint, 04.11.05, 12:00 AM ET

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Commonly held beliefs that ain't so: that hydrogen cars are on their way, that Chinese manufacturers will flood the U.S. market, that gasoline is going to $3 and that Fiat will fail.
In the car business I am an infidel, an unbeliever. I don't believe General Motors' biggest problems are its first-quarter losses or the poor outlook for the remainder of the year, or even its vehicles, which aren't selling that well, or its marketing or its medical costs. The vehicles are getting better, and someday the marketing will do the same. Heath care costs for workers and retirees could be cut if GM's executives had the courage to face up to the union. What GM needs is a leadership that understands the automobile business and is willing to fight, really fight, openly, for survival.

I don't believe the Hyundai Sonata is the most reliable car in America, even though Consumer Reports says it is. Consumer Reports says 810,000 subscribers replied to its survey, but only 276 of those drive a Sonata. I think Hyundai is making some neat vehicles and getting better, but 276 cheers isn't enough for me.

I don't believe we'll see mass production of hydrogen-powered cars anytime in the next two decades, if ever.

I don't believe we're going to be flooded with Chinese-made cars, not for a long long time, if ever.

I don't believe that a car company is in trouble just because two months' sales have fallen from last year. Sales of Honda cars and trucks are down 8% in two months this year, more than Ford's decline. Lexus, the luxury division of Toyota, is down 6%. Mercedes is down 18%. But I'm not going to worry about any of them. They are smart fellows and have good stuff coming, like a new Civic car for Honda and a new hybrid Lexus sport utility vehicle.

I don't believe the trend toward trucks--especially sport utility vehicles--will stop, although I think we will be buying smaller and more carlike SUVs and fewer of the biggest models.

I don't believe that "globalism" or world cars or common underpinnings for similar foreign and American cars are an answer to Detroit's problems. I don't believe North America is a poor place for manufacturing because of high wages. The Germans and Japanese and Koreans are building plants here as fast as they can.

I don't believe we'll see regular gasoline at $3 this year or next, except maybe in California, where anything goes.

I don't believe Toyota's cars are boring. Anyone who's seen the new Toyota Avalon or the new Lexus GS or the coming FJ Cruiser should realize that Toyota has caught the design bug and is making hot styling a must. But I don't believe Toyota is preordained to conquer the world.

I don't believe it makes sense to add models in a declining market. For example, the family sedan market is shrinking. But Ford is killing one car, the Taurus, and replacing it with two, one larger, the Ford 500, and one smaller, the Ford Fusion (coming next fall). Smarter people put fewer models in shrinking markets, not more.

I don't believe anything, victory or failure, is preordained in the auto industry. Nissan and American Chrysler wheeled from defeat to victory in just a few years. A fiercely determined leadership did it, French at Nissan, German at Chrysler. But I've seen Americans do the same thing. Lee Iacocca at Chrysler, Philip Caldwell at Ford, George Romney at American Motors. Americans can do it, too.

I don't even believe that Fiat in Italy will fail. The new chief seems like the type of leader to save the Italian company. He also should go on TV poker, Texas Hold 'Em, because he is the best bluffer I ever saw.

I don't believe this will be an easy year, even if sales stay high at 16.5 million or so for the U.S. market. This year is going to be terribly painful for GM and less painful at Ford. German and Japanese companies will hurt--their cars are selling well, but profits are declining from the drop in the euro value of the dollar.

Getting discouraged is a serious hazard when writing about the American automobile industry. The Germans and the Japanese and the Koreans keep coming up with terrific products. They produce cars for home and export markets and so have large production runs. They can send a few thousand over here, and those few thousands, multiplied by so many models, add up. Their quality and technology are strong, their designs exciting. Their executives are usually car men who understand more than a balance sheet.

Our Detroit-based industry doesn't export, so taking a chance on a new model is a terribly expensive venture. But every time I see that Chrysler 300C, or Ford Mustang, or yes, a big black Cadillac Escalade roll down the street, I know the home team is still capable of building winners.



Jerry Flint, a former Forbes Senior Editor, has covered the automobile industry since 1958. Visit his homepage at www.forbes.com/flint.