The domestic manufacturers will continue to confront serious financial burdens, wholly apart from any changes in fuel economy regulations. The domestic automotive industry is mature and highly cyclical; the peaks and troughs in vehicle demand essentially parallel economic activity. Even though Chrysler, Ford, and General Motors have diversified through foreign vehicle production and sales, as well as nonautomotive activities in financial services, defense electronics, and vehicle rental companies, vehicle production in North America is an important part of their total sales. The level of vehicle demand is the primary factor in determining profitability, but market share and the mix of cars and trucks and of small and large cars also influence profits.
