Is There An Upside To The Downside In The Car Business?

Implications: For those of us in the car business, the short-term pain in the industry may bring some long-term gain.

Analysis: So, gas is heading toward $4 a gallon, the dollar is headed downhill just as fast, people can't afford to keep their homes, the national economy is tanking, the Detroit Three are really feeling the pinch, with auto sales pegged at their lowest since 1994.

What's to like about this situation? Actually for those of us in the car business, the short-term pain may bring some long-term gain. For amid all the doom and gloom, there could be a bright side for the auto industry, and, especially the Detroit Three.

A few years ago, it looked like the growth of new Asian brand plants, located mostly in southern states, was slowing, while Domestic automakers were eager to close U.S. plants and shift production to Mexico, China - or in a few special cases, import vehicles from Europe.

Now that economics of vehicle production have been changed by the dollar/euro currency shift, domestics are starting to reconsider their off-shoring strategies and may start exporting cars to Europe from the U.S.. One Japanese automaker Mitsubishi, will even be exporting an Illinois-made model to China.

Meanwhile, the Europeans are lining up to build new plants here. BMW plans to invest $750 million at its Spartanburg S.C. plant. VW is planning to build VW's and Audis in America, possibly in two plants.

As for the rising cost of fuel, the U.S. automakers are starting to introduce some superior compacts to market. The domestics in particular are bringing game-changing technologies such as two-mode hybrid system developed by GM, and the forthcoming Ford Fiesta. GM is currently testing lithium-ion batteries for its electric-drive Chevy Volt, which it hopes to offer customers in 2010. Sales of the Volt could reach 100,00 by 2012. The domestics are certainly struggling, but don't count them out.