In 2005 we certainly saw a swing in the momentum of the US Automakers, as fuel prices continued to rise, the most popular SUVs fell out of favor. The SUV is a very high profit product and as consumer demand fell so did the profits of the US Automakers. Many SUV models are 3-times more profitable than a standard car, meaning they would have to sell three cars to equal the same amount of profit as selling just one SUV.

Some have claimed that for not learning our lessons of history the US Automakers are repeating the Deming Years, as the Toyota Tercels, Datsun Hatchbacks and Honda Cars stole the show, as American Consumers traded in their Pontiacs, Oldsmobiles, Buicks and Cadillacs. But in the past eight years the US Automakers had one hell of run with their light trucks, SUVs and Mini-Vans.

Indeed also of concern is the mounting healthcare costs, underfunded pensions, high paying Union jobs and the Delphi Bankruptcy. Another issue is the older more restricted factories cannot retool for new models as fast as the Modern Robotic Factories, nor can the older factories put out the sheer volume of vehicles and certainly not even close to the same efficiency.

Robotic Factories can produce far more cars than the World Wide demand for Automobiles and the US Automakers are not the only ones who have these superior technologically advanced robotic warehouses, factories and distributions chains. Daimler Chysler, Honda, Nissan, Toyota, Volkswagon and even the newest brands in China, India and South Korea all have them too.

What is the answer from a business standpoint? Cut capacity at the costliest plants, those factories using human labor and thus from a human standpoint it is indeed a disaster as 60,000 high paying Union Auto Workers are being let go. It is complete devastation for many regions relying on their auto-manufacturing sector to maintain economic growth. Many of these regions maintain 17-25% of their jobs in the manufacturing industry and it does not appear that retailing or service sectors can make up that difference or come close to that level of salary wages and benefits.

2006 will force the US Automakers to take this opportunity to downsize, cut costs, readjust their strategy, go back to core businesses and start new companies that can make the next generation of vehicle; the Hybrids. We will see many more hybrid models towards the middle of 2006 as the 2007 models start arriving at the dealerships. We will see consumers take advantage of the tax incentives to buy more fuel-efficient and hybrid vehicles thru 2007. Innovative technologies in fuel-efficient diesels will also be introduced and have remarkably increased fuel economy. Capacity will be cut, as well as dealer consolidation and franchise terminations of auto dealerships.

We will witness a re-aligning of laws and reneging of pension promises, along with replays of sales techniques, incentives and dealer/manufacturer sponsored sales programs. Since the economy is strong going into 2006 we will see year end sales about the same as 2005 providing fuel prices do not peak too many times due to artificially induced supply crisis events and fuel future market maker players running up barrel prices on conveniently contrived fictitious news near or on 3-Day weekends. 2006 will a very interesting year and will take some creative and hard hitting cost cuts for AutoMakers who play in a survival of the fittest high stakes industry. Think on this.