It's Not the Greens, It's the Greenbacks

U.S. auto executives are crunching numbers, trying to figure out which trucks to keep and which to junk. Their counterparts in Europe and Asia are reviewing product plans, looking at the possibility that North America might now be hospitable to micro-cars that have long been popular overseas.

The global car industry is topsy-turvy. Fuel conservation is in. Horsepower for the sake of horsepower is out -- at least, for most of us.

It is the world Hummer-haters said they wanted. It is the one for which legions of environmentalists and believers in the corrective powers of regulation lobbied. But here's suggesting that they had little to do with the current situation.

When it comes to change in a capital-intensive industry such as the car business, money talks, and politics walks. And money, particularly the increasingly large amounts spent by consumers on motor fuels, has been talking loudly lately. It has turned into a bully, pushing automobile executives to cancel some products in favor of others.

Here's the deal:

Conventional wisdom about the way automobile companies think and work is wrong. Car companies are not wedded to any given products, not betrothed to any sacred strategies.

General Motors, Ford and Chrysler are not truck companies, as they often have been portrayed in the media. Toyota and Honda are not environmental enterprises.

GM, Ford and Chrysler will make and sell small, fuel-efficient cars if they think they can do so profitably. The proof is that GM and Ford have been doing exactly that for years in foreign markets. One of the best-selling cars in Russia today is the little Ford Focus.

Toyota will sell gas-guzzling trucks, and Honda will sell sport-utility vehicles, whenever and wherever they think they can sell them profitably -- in the United States, for example, where Toyota until recently has been pushing its massive Tundra pickup truck and where Honda until recently has been celebrating strong sales of its Acura MDX and Honda Pilot SUVs.

Toyota and Honda are small-car experts by default, because their home markets, long beset by fuel-supply and pricing woes, have always demanded fuel-efficient models.

They have, therefore, a temporary advantage over GM, Ford and Chrysler in the current market shift from trucks to cars. But "temporary" means just that. Domestic car companies are adjusting to fuel-price-induced changes much more quickly than vehicle sales numbers or media reports indicate.

GM, for example, is dropping the Hummer H2 SUV, just as it jettisoned its original Hummer, the H1, in 2006.