Ground Zero of the economic slowdown has been the housing crisis. And ground zero of the housing crisis has been Detroit.
Actually, Detroit has been in a housing slump since the middle of 2005, when oil prices began to boom and domestic car sales began to slow. Clearly, Detroit got sucked into focusing on big, profitable trucks. More than 10 years after Toyota introduced the Prius in Japan, there is still no American hybrid.
So what can Detroit do now? In the ‘80s and ‘90s styling did the job. But this time it will take more than a makeover. Engineering needs to come into play.
A big paper asked what consumers want in a car. The answer? Milage. A minivan with 25 mpg. A sedan with 40 mpg. We may act like we want a GPS and other toys, but really, mileage is gonna sell cars.
Can Detroit deliver? Advance stories are that they may be late to the party, but several new models could deliver SUVs and sedans with what we need. Only the companies need to do it sooner rather than later.
Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!
Follow me on Twitter @GlobalMarketUpd