Which Auto Brands Should Go?

There are too many brands and not enough buyers. Many auto-industry insiders agree weak ones should go, but it's not that easy

By Jim Henry

May 5, BusinessWeek

There's a growing sense among currency traders that the U.S. dollar might finally stop its long slide against other major currencies.

The euro almost hit $1.60, a record high against the dollar, on Apr. 22, the same day the dollar index—a measure of the greenback against a basket of major currencies—also showed record weakness.

But since then, the buck has been on a modest upswing. The euro traded at $1.54 on May 2, and the dollar index is 3% off its lows. "We think the dollar is carving out a bottom," says Meg Browne, senior currency strategist at Brown Brothers Harriman.

The main cause of the dollar's recent strength is the same reason for its rapid collapse over the past year: the U.S. Federal Reserve. The dollar's value suffered when the Fed cut interest rates rapidly to stem the financial crisis and prevent a U.S. recession. The turning point may have been on Apr. 30, when the Fed lowered the fed funds rate target by a quarter-point, dialing back on its policy easings after a series of half-point cuts. Many believe the central bank is putting its rate-cutting on hold for now.

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photo: Hummer is GM’s newest brand, acquired from AM General in 1999. To escape being “last in, first out,” Hummer must outlive its gas-guzzling reputation. A toned-down version of the HX Concept shown at the Detroit auto show in January could help. It’s small and can run on renewable ethanol, but looks like something you would drive on a rescue mission – which in a way, it is, if it can rescue the Hummer brand. In GM’s new scheme, Hummer is buddied up with Cadillac and Saab. That could compel more shoppers to look at Hummer, even if they weren’t expecting it (BusinessWeek)