High gas prices: Detroit cries uncle

Both Chrysler and Ford have publicly conceded that they do not think high gas prices will lower before the end of the decade. As a result, Chrysler's CEO, Thomas Lasorda, said that the company had prepared a business model that assumes gas prices will remain $3 to $4 per gallon for the next 3 to 4 years signaling a shift in focus for their future model line-ups.

This shift, however, from the high-profit margins of SUVs to the much more competitive fuel-efficient segment isn't going to be easy. According to Autodata statistics, currently about 75 percent of Chrysler's sales are from pickups, SUVs and minivans. It's about 66 percent for Ford and 60 percent for GM.

It's important that Mr. Lasorda use the past tense here when speaking to the media as he says "prepared a business model" as the development of a new vehicle typically takes 3 years or longer. Jesse Toprak, a analyst at Edmunds, says, "I don't know if they will be able to come out with new products that quickly." The near future for the Big 3 undoubtedly looks bleak.

[Source: New York Times via Detroit News]

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