General Motors customers have some good news, and some bad. The automaker plans to raise prices a whopping 3.5 percent - or an average of $1,000 per vehicle - on 2009 models. But there are also some good deals coming, according to Mark LaNeve, head of sales, service, and marketing, as GM struggles to clear out a bloated inventory of leftover ‘08s.

Most of those in-stock models will be offered, during a one-week clearance campaign, with a 72-month, 0 percent finance package. And customers who buy, rather than lease, will qualify for $500 rebates.

GM previously raised prices on its 2008 models twice, and then as now, the moves reflected the sharp run-up the industry has seen in the cost of raw materials, everything from steel for sheetmetal to the palladium used in catalytic converters. The industry giant isn't alone. Chrysler recently raised its own prices 2 percent, and other makers, including Toyota, have taken steps to at least pass on some of their rising production costs.

Industry observers question whether the new clearance deals will really empty out an inventory particularly bloated with unsold pickups and SUVs, and anticipate further offers before the model year wraps up.

Meanwhile, GM is taking steps to head off further inventory problems, especially on the truck side. By cutting line speeds or suspending production at seven of its North American plants, it hopes to take 170,000 vehicles out of the mix during the second half of 2008. But it also intends to add 47,000 of its more popular passenger cars and crossovers, reflecting the ongoing shift in the U.S. market, driven by record fuel prices.

With fuel prices soaring, car sales plunging, and the weak economy holding out little promise of a turnaround, the situation is looking increasingly bleak for Ford Motor Co. The troubled automaker revealed on Thursday that it no longer expects to return to profitability next year and will have to sharply scale back production in the meantime.

During a conference call with reporters, CEO Alan Mulally revealed that the increasingly dire situation will require some drastic responses by Ford. Among other things, the automaker plans to cut production 15 percent during the second quarter, up to 20 percent during the third quarter, and as much as 8 percent during the final three months of the year.

The cuts will be focused on Ford’s light truck lineup, for, as Mulally noted, there’s a fundamental shift under way in the market, away from pickups and SUVs to more fuel-efficient passenger cars and crossovers.

“Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," said the former Boeing executive, who signed on with Ford in the fall of 2006.

Mulally declined to say whether he believes Ford can return to the black by 2010, suggesting, “We’ll all know a lot more after the next few months.” The problem is that there is no way of telling where the economy is going, particularly with no end in sight to soaring fuel prices.

Chief Financial Officer Don LeClair, who joined in on the call, said Ford is forecasting gasoline prices of $3.75 to $4.25, “for this year and the balance of next,” but some analysts now believe that petroleum itself could top out at $200 a barrel, which would push pump prices up to $6 or more a gallon.

That is, of course, only part of the problem for the conventional light trucks, such as the F-150 pickup and Explorer SUV, which had dominated Ford’s production and profits for much of the last two decades.

In recent weeks, the pickup segment of the U.S. motor vehicle market has plunged from 11 to 9 percent. The CEO said, “I think part of [the weak truck market] will come back because there’s a fundamental need” for big pickups, particularly to support housing construction. But he conceded he is unsure “how much of that will come back.”

The cuts in truck production are only part of the effort being made to adapt to changing market conditions. Ford is studying a number of changes to its product portfolio, Mulally confirmed. While he didn’t directly respond to one reporter's question, he tacitly acknowledged recent reports that Ford is developing a smaller version of its big F-Series truck.

Separately, a source highly placed within the company’s product development system told TheCarConnection that new concepts, aimed at improving aerodynamics, could make such a vehicle far more fuel efficient than traditional truck designs.

But car-based crossovers, such as the Ford Edge and the upcoming Flex “people mover,” appear to be dominating the company’s future line-up. The next generation of the once-wildly popular Explorer SUV – which has lost nearly half of its volume since the decade began – will be crossover, rather than truck, based.

Meanwhile, Ford revealed it will speed up plans to start merging its North American and European product programs. The first tangible example of that move, at least as now scheduled, will be an American version of the Fiesta subcompact, currently scheduled to hit market here in 2010. Ford desperately needs an entry into that segment, which has been dominated by Japanese offerings, such as the Toyota Yaris, Nissan Versa, and Honda Fit.

Ford’s cross-town rivals are also looking to fill that niche. General Motors has turned to its Korean subsidiary, Daewoo, for models like the Chevrolet Aveo, while Chrysler has negotiated small car deals with both Nissan and the fast-rising Chinese carmaker, Chery.

The market misalignment has complicated the problems Ford faces in the current, fast-declining auto market. CFO LeClair noted that going into 2008, Ford had forecast demand for 16 million vehicles, but that has now fallen to somewhere between 15 to 15.4 million. At the same time, Ford’s share has fallen from an estimated “low end of 14 percent to 15 percent,” to somewhere closer to 14 percent for 2008.

The reality, said Mulally, responding to an industry analyst’s question, is that Ford’s recovery is “going to be slower than everybody thought.”

Is Hyundai getting ready to unleash a wave of new luxury car products? The decision will likely depend on what happens once the automaker’s new Genesis sedan reaches the U.S. market in the coming months, various senior company officials revealed during a tour of Hyundai operations in South Korea this week.

The long-awaited Genesis sedan is already on sale in Hyundai’s home market, but the real measure of its success will be the response the company gets in the States, a market that currently accounts for more than a fifth of the automaker’s total global volume, suggested Vice Chairman Dong-Jin Kim.

“We put a lot of importance into Genesis and would like to see it succeed,” stressed the executive, during a wide-ranging conversation. “If we succeed with Genesis, we (will be) confident to introduce more products into the luxury market in the future.”

The initial Genesis sedan is a relatively conservative-looking vehicle, but one that plays to Hyundai’s traditional strengths: It will feature a high level of content, but carry a relatively low sticker price – starting somewhere just under $30,000 for the V-6 model – and carry the automaker’s 10-year warranty.

Early next year, a second version of the low-luxury model will launch, and it will be “much more expressive” in design, asserted S.G. Oh, Hyundai’s worldwide design director. Sightings of the Genesis Coupe, on Hyundai’s test track, confirm that the production version is essentially identical to the concept version displayed at this year’s New York Auto Show.

Oh, and several other Hyundai officials confirmed that a number of other luxury vehicles are in various stages of development. But what happens with those various models has not been completely determined yet, for at some levels, the Genesis project is still a concept in process.

At one point, Hyundai gave strong consideration to launching an entirely new luxury marque, much like Toyota’s Lexus brand and Nissan’s Infiniti. But the much-debated strategy was effectively sidelined by the consulting firm Hyundai hired. Its conclusion, said CEO and Vice Chairman Kim, was very negative.

“It would cost us too much money,” Kim said Hyundai realized, somewhere in the neighborhood of $2.5 billion for the retail network alone. That’s on top of the $500 million invested in the development of the first Genesis products, and to support a network would require a number of additional vehicles. “It would take 13 years to break even,” Kim added, “and 20 years to recover our losses.”

So at least for now, Genesis will be sold in the States through existing Hyundai dealers, though the automaker will reserve the possibility of spinning off the two new cars – and future models – into a Lexus-like sales channel sometime in the future.

As to initial sales goals, the Vice Chairman said he expects the U.S. to account for nearly 40 percent of the Genesis sedan’s first-year volume – the global target is 80,000, with the car going to not only the U.S. and Korea, but a number of emerging markets, like Saudi Arabia, China, and Russia. “The main market for the Coupe is the U.S.,” Dr. Kim added, and of a targeted 60,000 global sales, he is hoping to reach 25,000 in the States.

While the numbers are relatively modest, at least when compared to competitors like Lexus, Infiniti, BMW, and Mercedes-Benz, Genesis will play another role, emphasized Joel Ewanick, Hyundai’s senior U.S. marketing executive.

“We see Genesis as a way to sell all our cars and enhance the brand,” he explained. “It will help us sell Santa Fes, Sonatas, and Accents.”

Long seemingly invulnerable to the ups and downs of the American automotive market, Toyota is suddenly getting sheepish about future programs. For one thing, the Asian automaker will delay the opening of a new sport-utility vehicle plant it had hoped to open next year in Tupelo, Mississippi.

Meanwhile, production at the plant will be trimmed back to an initial 120,000 vehicles, rather than the annual output of 150,000 the automaker had originally planned, according to a Toyota spokesman. The company could expand production later, depending on demand, the official added.

The news comes only days after Toyota revealed that the ongoing slowdown in the U.S. new car market would almost certainly result in a decline in global profits – the first time that’s happened in nine years. As a result, Toyota is looking at ways to shift its resources to emerging markets, such as China, India, and Russia, which it needs to help prop up its sales and balance sheet.

As it now stands, Toyota is anticipating a 27 percent drop in profitability, to 1.25 trillion yen, or $12 billion – a number that other manufacturers still can only envy. Its Japanese competitor, Honda, has also predicted declining earnings of 18 percent. And archrival General Motors recently reported massive losses, largely due to the downturn in the American market.

Toyota had been counting on steady gains in the States to help it surge past GM in the global sales sweepstakes. The U.S. carmaker eked out a narrow victory in 2007, but Toyota nudged past it during the first quarter of 2008.

Toyota’s plans for the Tupelo plant – which was to build a replacement for the Highlander, an SUV/crossover – reflect a variety of factors, starting with the broad downturn in overall U.S. sales, which are expected to dip by as many as 1 million vehicles in 2008. Making matters more challenging, Toyota isn’t the only manufacturer adding capacity in North America, where there is already enough factory space to produce about 17.4 million cars, trucks, and crossovers annually – but only estimated demand for about 14 million. Honda is adding a plant, as is Kia, the downmarket brand owned by Hyundai Motor Co. And other makers, such as BMW, are expanding existing operations.

If there’s a positive side, some makers are looking to North American facilities as a way to cope with the weakened U.S. dollar. BMW, for example, is expected to replace some of its current German imports with the expanded output of its Spartanburg, South Carolina, plant.

Toyota isn’t the only maker shifting resources out of North America, long the world auto industry’s prime profit center. BMW announced, recently, that it would divert product previously earmarked for the States. And even GM is considering where to focus itself. Not many years ago, North America accounted for 75 percent of the automaker’s business. Today, that’s down to around 50 percent and, said Vice Chairman Bob Lutz, that could soon drop to just 25 percent, as demand increases in booming outlets like China, Russia, India, and other emerging markets.

It should be a time to celebrate over at Chrysler. After all, the automaker’s two cross-town rivals have effectively abandoned the long-lucrative minivan market, leaving the Chrysler Town & Country and Dodge Caravan the only two remaining domestic offerings.

Unfortunately, despite the launch of highly-reviewed, all-new 2009 minivan models, Chrysler is watching its share of the critical segment plunge. Together, sales of its two models have dropped a whopping 12 percent since they were updated, last year, notes a report in today’s Detroit Free Press.

Why is the proverbial $64 question. The Michigan maker would prefer to put the blame on its move to scale back low-profit daily rental and other fleet sales, as well as the decision to abandon the short-wheelbase version of the Town & Country and Caravan models.

Perhaps, but there are other factors at play, analysts and observers tell TheCarConnection.com. For one thing, Chrysler has been taking hits for quality snafus, notably in the April issue of the influential Consumer Reports magazine. And it doesn’t help that while General Motors and Ford have dropped out of the minivan race, key Asian competitors have only ramped up their attack on the segment.

In a stunning surprise, Honda briefly overtook Chrysler on the sales charts, late in 2007, though the American maker retained the lead for the full year.

It doesn’t help that minivan sales, as a whole, have dipped by double-digit numbers for the last two years in a row. A Chrysler spokesman recently posted a review, on the company blog, insisting it’s not time to “write off minivans,” but increased foreign competition, along with the overall declining market, certainly is leading Chrysler officials to rethink their options.

In recent months, Chrysler officials have announced plans to scale back their overall line-up, eliminating weak models like the PT Cruiser Convertible. And Vice Chairman Jim Press has asserted that a critical corporate goal is to better differentiate what are now look-alike products shared by divisions such as Chrysler and Dodge. Despite different accessories, that pretty well describes the Town & Country and Caravan minivans.

For the time being, it seems, Chrysler will have to re-jig its marketing campaign to rebuild momentum for the struggling minivans, a move almost certain to be accompanied by hefty new incentives, during the upcoming Spring selling season.

Longer-term, however, some observers, the Free Press noted, are wondering if Chrysler just might drop one of its current minivan offerings, opting to switch to a different, more youth-oriented “people move” design, in line with Ford’s new Flex model. Which Chrysler model would go? The Dodge Caravan has traditionally been the high-volume package, but its sales are slipping, while the higher-priced Town & Country is faring unexpectedly well in the marketplace.

One thing is clear, Chrysler can’t afford to become an also-ran in the huge market segment it created, nearly a quarter century ago. But finding the key to a turnaround in the minivan market won’t be easy.

We Drive Chrysler's Town & Country. (3/28/08