Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Thursday, August 10, 2006

Detroit Bets on Rapidly-Falling Oil Prices

Daniel Gross writes:

Daniel Gross: August 06, 2006 - August 12, 2006 Archives: HOT WHEELS: Nick Bunkley writes in the New York Times about Ford and GM's contrarian business strategy.

As gasoline prices surge past $3 a gallon in most of the country and closer to $4 in some cities, sales figures show Americans are snapping up small cars that go easier on fuel and on their wallets. But none of the smallest cars are designed or developed by Detroit companies, which in the face of high gas prices are now highlighting another kind of automobile not usually thought of as energy efficient: the muscle car.

Ford Motor said Wednesday that it planned to build a 325-horsepower version of the Ford Shelby GT. It also plans a big luxury car, the Lincoln MKS, which will become the struggling brand's flagship sedan. The announcement came at an industry conference here sponsored by the Center for Automotive Research. On Thursday, General Motors is expected to confirm that it will resurrect one of its most famous muscle cars, the Chevrolet Camaro, which was a hit at the Detroit auto show in January....

Ford or Chrysler sell no subcompacts in the United States, even though they or their corporate parents sell them in other global markets. By contrast, Toyota, Honda and Nissan have all introduced small cars in the last few months, all of them sold overseas.

"It is a mistake and it's very disappointing," said John Casesa, managing partner of Casesa Strategic Advisers in New York. "I just think it shows that Detroit still has a business model predicated on low energy prices."

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