When pickup sales dived, automakers changed plans

On this morning in the middle of May, the man who heads Ford Motor Co.'s Americas operations has seen enough.

The line on a chart showing subcompact car sales for the first two weeks of the month goes almost straight up. The one for pickup trucks, Ford's biggest profit center, runs almost straight down.

High gasoline prices and the economic downturn are changing the market far faster than anyone anticipated. Without action, Ford would be making too many trucks and not enough cars, a recipe for a balance sheet peppered with parentheses.

"This is going on 10 weeks where we're seeing this not get any better," Fields recalled in a recent interview. "So we'd better act, and we'd better act now."

Eleven miles away at General Motors Corp., they were reaching the same conclusions. Consumers were delaying big-ticket purchases. Those who bought weren't going for GM or Ford trucks and sport utility vehicles, instead snapping up just about anything that gets more than 30 miles per gallon.

At both companies, executives were alarmed. Eventually they made almost desperate decisions that will cost thousands of jobs, change the vehicles people drive and determine whether their businesses survive.

"We need to get in front of it," Mike DiGiovanni, GM's executive director of global market and industry analysis, recalls saying. "If you wait too long on it, the pain would get a lot worse."

While both companies say they took quick action, critics wonder why they didn't make more fuel-efficient vehicles sooner. After all, there were many signs that gas prices would do nothing but rise.

"Obviously they were making just too much money off their SUVs and pickups," said Roland Hwang, vehicle policy director for the Natural Resources Defense Council. "They couldn't really fully conceive of a world where they would have to rapidly extricate themselves from those markets and those profits."