Can Detroit's automakers catch up with Japan's fuel-saving vehicles without going broke? An excerpt from Alex Taylor III's Fortune article:
Indeed, the Detroit Three have been getting a free pass on fuel economy for more than two decades. Instead of devoting its considerable technical resources to improving gas mileage, it has been cranking up the horsepower of its engines and selling modified trucks as SUVs.
As a result, Bank of America figures Toyota has a five-year lead in the development of hybrid gas-electric vehicles, a technology that Detroit soft-pedaled until recently. Although GM is promising a breakthrough in fuel cells by 2010 and developments in plug-in hybrids even sooner, production of fully-functional gasoline-free vehicles still seems years off.
Still, there is no point in kicking them while they're down. GM (Charts, Fortune 500), Ford (Charts, Fortune 500) and Chrysler are on the brink of collapse. All three companies start the miles-per-gallon race far behind Japan's Big Three.
According to data compiled by Lehman Brothers, GM - the domestic leader in car mileage with 29.3 average miles per gallon - can't touch Toyota, which notches an average of 34.7 miles per gallon. And Chrysler - the American leader in truck corporate average fuel economy (CAFE) standards with 21.9 mpg - is light years behind Honda's 24.5 mpg.
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