AUTOS: Nothing Under The Hood

Nothing Under The Hood

Detroit's automakers, awash in profits for the past four years, are in a severe drought. When the Big Three last week announced their profits for the fourth quarter, the cost of their incentive programs was all too clear. While car sales dropped 20%, profits plunged much more. Ford's declined 73%, to $314 million, while General Motors' fell 50%, to $700 million. Chrysler lost $664 million, its first deficit since 1982.

Because of an auto-production glut and a consumer hunger for bargains, the Big Three have become dependent on incentives to move merchandise. Result: even when car sales are decent, profit margins...

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