Will Fiscal Crisis Crush Ailing U.S. Auto Biz?

Sales even declined for the Ford 150, which, until last year, had been America's top-selling automobile for 30 years running.

"Fuel prices were spiking so high that people were abandoning trucks in droves," Bragman said. "Those people who didn't absolutely need to have a truck got rid of it or didn't buy a new one when they headed back to the dealer."

Meyerand conceded that while demand for trucks is down, GM continues to benefit from truck sales.

"There is a market for those vehicles, and they are selling," he said.

Ford declined to comment for this story.

D'Aveni said American automakers have also been hampered by labor contracts that have kept the companies from saving money. The contracts prevented the car companies from shifting more operations to markets where labor is cheaper, he said.

"They should be making the cars wherever it's economically rational and it's not economically rational to make all your cars in the U.S.," D'Aveni said.

He also said that GM, specifically, was hamstrung by "redundancies" in its products. Different GM brands, he said, produce similar vehicles -- from sports cars to family sedans. The redundancies have continued, he said, because different GM dealers -- from Chevrolet to Buick -- demand variety in their products and don't want to spend money to add different GM brands to their lineups.

"The Chevy dealer doesn't care that you have a Buick family sedan," D'Aveni said. "The Chevy dealer says give me a [Chevy] family sedan."

The simplest way for GM to resolve its dealer problem, he said, would be to file for bankruptcy and build new relationships with its dealers

It's a solution GM says it won't consider because the consequences, Meyerand said, aren't worth it.

"Nobody wants to buy something from a bankrupt company," he said, "so why would you even consider doing that?"

And, Meyerand said, GM's global production is more flexible than critics perceive. Thanks to renegotiated union contracts, he said, the company is able to make vehicles more cheaply both in the United States and abroad.

A GM-Chrysler Merger: A Solution or Just Senseless?

Unlike GM and Ford, Chrysler's financial situation is unknown to analysts -- the private equity firm Cerberus Capital Management purchased a majority stake in the automaker last year. As a result, Chrysler is no longer publicly traded, and its books aren't open to public scrutiny.

But analysts say they don't need to see Chrysler's books to know that the automaker has its own problems, including a lack of fuel-efficient cars and overall poor ratings on the quality of its vehicles.

And, like other automakers, Chrysler's sales are down.

"I think that the market shift took Cerberus by surprise," Bragman said. "Things have gotten a lot worse than they had expected in terms of [Chrysler's] profitability, in terms of income and revenue."

Bragman said that it could be in Cerberus' interest to sell Chrysler to GM, but that doesn't mean that a merger of Chrysler and GM would actually be a good idea.

"My general theory about the merger -- if you take two sinking ships and put them together, all you've created is a Titanic," said D'Aveni.

D'Aveni and Bragman agree that the problems suffered by each automaker won't be resolved through a merger of the two.

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