In remarks made in March about the auto industry, President Obama said, "We cannot, we must not, and we will not let our auto industry simply vanish." This is positive news for many, but it may actually signal the end of the consumer-driven American automotive industry.

Depending on how active the Obama administration chooses to be regarding the operation of General Motors and Chrysler (the government already forced out GM CEO Rick Wagoner), bureaucrats may restrict the types of cars these two manufacturers sell in the post bail out future. Government leaders such as Nancy Pelosi have already voiced the opinion that Americans should drive smaller, more efficient vehicles. Conditions on the bail out funds may be the vehicle used to force GM and Chrysler to build only what Washington wants them to build. Additionally, changing emissions regulations will force Ford Motor Company and other producers to follow suit.

More information will surface, so it is too soon to accurately predict what GM and Chrysler may look like when they emerge from the Obama team's restructuring program. However, one can assess and offer educated conjecture about how President Obama's actions may affect the cars arriving in showrooms of the future.

Cleaner Cars

Bureaucrats want Detroit to build cleaner cars. Because facts don't generally make good sound bites, politicians and regulators do not highlight the fact that every new car and light truck in sold in the U.S. run nearly emissions free once the engines have warmed to operating temperature. Current regulations already mandate exhaust emissions so clean that in U.S. cities experiencing heavy pollution days (think L.A. in August), the gases leaving a new passenger vehicle's tailpipe are cleaner than the air entering the engine.

So what do politicians really mean when they talk about "cleaner cars?" It's all about carbon dioxide emissions. Environmentalists have convinced enough members of enough different government bodies that C02 emissions must come down to combat alleged global climate change. President Obama believes that man-made C02 is dangerous.

Avoiding ongoing arguments regarding man-made C02 emissions and its impact on climate change (whether it is major or non-existent), because of a Supreme Court ruling during the Bush administration, C02 can be regulated by the Environmental Protection Agency. New regulations are expected to begin impacting vehicles as soon as the 2011 model year.

With current technology, the only way to lower C02 emissions is for vehicles to consume less carbon-based fuel; gasoline, diesel fuel, natural gas, liquid propane, and coal-generated electricity.

More Fuel-Efficient Cars

Currently, government mileage targets are 35 mpg by 2020. The Obama administration may change this goal and increase the mpg even further. In general, meeting the "35" rule mandates small, lightweight vehicles with small, highly-efficient engines.

Expect more use of high-strength, light-weight steels such as boron. Ford already uses boron in its 2009 F-Series pickup to save weight while maintaining crash protection capabilities. More exotic and expensive materials such as carbon fiber will expand from use on exotic sports cars to more mainstream applications.

Regarding engines, manufacturers will attain more efficiency from smaller internal combustion engines. Technologies that contribute to added mileage include direct injection, variable valve timing, and auto-stop engines. High-performance models will utilize forced-induction such as turbocharging or supercharging. Diesel engines could also see expanded use (now that clean-burning diesels are available), but further tightening of C02 emissions could rule out this choice altogether.

The availability of hybrid powertrains will also expand considerably to include more vehicles and classes of vehicle. Some manufacturers have already announced long-range plans that show hybrid editions of every model offered. Types of hybrids will also expand beyond the current mild-hybrid (characterized by the Chevrolet Malibu Hybrid), single-mode hybrids (Toyota Prius and Ford Fusion Hybrid), and dual-mode hybrids (GM full-size trucks and SUVs). These hybrid types are parallel hybrid designs where both the gasoline engine and electric motors directly power the wheels. The upcoming Chevrolet Volt is a series hybrid; the Volt's electric motor provides acceleration while its on-board gasoline engine is used only to charge the batteries. Plus-in charging for hybrids is also just over the horizon.

The common trait with these new C02-reducing techniques is higher cost. Tomorrow's more efficient cars and trucks will be more expensive.

Disappearing Cars

In a move largely seen as giving in to Washington, General Motors recently closed it High Performance Vehicles division. The HPV team was largely responsible for GM's most exciting cars including the Cadillac CTS-V and the Chevrolet Corvette ZR1.

Bureaucrats have little use for performance-oriented V-8 powered cars, so don't expect cars like the Chevy Corvette, Dodge Viper, Chevrolet Camaro SS, or Dodge Challenger R/T to survive long term. Their survival is no longer tied to customer demand, but to the demands of the government that now controls the product portfolios and development dollars at GM and Chrysler. Recently, GM announced it was killing its Pontiac brand, a concept that seemed to define performance all by itself some decades ago. Now that brand is gone.

Ford Motor Company will also likely be affected. New emissions regulations may keep future V-8 editions of the Mustang in the barn.

According to John Wolkonowicz, Senior Analyst at HIS Global Insight, "With Obama's plan, everything changes in the domestic automotive world. The government will be able to dictate what General Motors and Chrysler can sell. Washington believes it knows what Americans should drive, and this bail out gives them the means to dramatically change the market." Wolkonowicz sees the potential for a significant narrowing of choice in the automotive market. He says, "With the power given them by the bail out, the government can simply mandate certain classes of cars and trucks out of existence, regardless of whether they are popular with American drivers or not."

After studying the government's response to GM's survival plan, Wolkonowicz believes that the only way for GM to secure government funds will be to become even smaller than they had proposed. The analyst expects GM to shrink to just two divisions, Cadillac and Chevrolet. Buick, Pontiac, GMC, Saturn, and HUMMER will all cease to exist.

While GM will soldier on in its smaller form, Wolkonowicz doesn't expect Chrysler to survive in its current form, even with news that Fiat has agreed to a broad partnership. If Wolkonowicz is wrong, the Fiat connection would provide Chrysler with needed small car vehicle platforms, but the fate of vehicles such as the Dodge Charger and Chrysler 300 doesn't look good.

Who Is At The Wheel?

This new age of government oversight in the automotive industry may progress using one of two strategies. The first path continues the current practice of setting regulations and then allowing manufacturers to meet those regulations. This allows manufacturers a high degree of flexibility in how they react while developing vehicles consumers want to drive.

However, the essential takeover of GM and Chrysler signals a more active role that will likely dramatically change the way the automakers do business. This second scenario removes the consumer from the auto manufacturing equation. Customer demand is directly superseded by political interest in ecology and energy policy. In other words, manufacturers will only sell vehicles the government allows them to sell.

Even with ever-present worries of fuel prices, some 70-percent of the orders for Chevrolet's all-new 2010 Camaro are for the V-8 edition that produces over 400 horsepower (while achieving up to 25 mpg on the highway). Clearly, American drivers want what they want. The question is whether that matches what the U.S. government will want Detroit to build.

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