However, there is one caveat.
It's basically that the environment is just not standing still. Some of the challenges come from within our industry. Others come from the outside.
First, the U.S. automotive industry has created a hazard to itself. The latest incentive war is no exception. Granted that it had some short-term macro-economic benefits, but long-term it is not a sound strategy. The incentive war continues to escalate today. I've said it before and I'll say it again - I view the incentive game as a disease.
With that said, basic logic shows that we have to play in this game and we will. We will remain price competitive. And while these incentive levels are squeezing the margins of the U.S. auto companies, foreign competitors are receiving a significant advantage through exchange rates. For instance, if you were to take a $20,000 imported Japanese vehicle in January 2000 and compare it to the same vehicle imported in January 2002, you'd find that on exchange rate alone they would have an incremental profit of $4,000.
That's a staggering figure, creating a pretty compelling challenge to the health of the U.S. auto industry.
Additionally, threats occur from outside our industry. I'm referring to major legislative actions that would restrict the domestic automotive industry. As an illustration, this week's past CAFÉ legislation in the Senate is a good example. The consequences of which would have been neither consistent with what consumers want nor consistent with a healthy auto industry and its effects on the economy.
Without re-opening the issue, the original Senate proposal is pretty much analogous to the statement by Henry Ford in the automobile's infancy - you can have any color Model T you want as long as it's black. It just doesn't make consumer or economic sense.