One thing will most color 2007: energy. Concerns about energy will affect sales of large trucks and SUVs--Detroit’s backbone--and will make small cars more attractive than they have been in recent years. Energy issues will continue fueling the move toward smaller, car-like “crossover” SUVs. Lots of new ones are forthcoming. Even Corvette advertising hypes fuel economy these days, and with the success of the Tesla Roadster, even the electric car is back--in a big way. Flagship luxury cars are getting hybrid and diesel variants. Energy concerns will affect every type of automobile in 2007.


The Unconventional Wisdom

Hybrids, diesels and ethanol-powered cars are not solutions to America’s energy crisis and in fact buy very little time. Ethanol has way too many drawbacks. It’s expensive to produce, doesn’t deliver as many miles per gallon as gasoline and is not available in many places. More important, hybrids, diesels and ethanol depend on fossil fuels. The world is going to run out of cheap crude oil, and as China motors up, the decline only accelerates. We need a replacement for fossil fuels, such as hydrogen- or solar-powered cars, not a massive government program to sell people on ethanol.

The Misplaced Assumption

That Detroit might bounce back. It will not. The downward spiral will continue, and nobody knows where the bottom is. The American auto industry has changed forever, and will never go back to the way it was. Ford (nyse: F - news - people ) and General Motors (nyse: GM - news - people ) are in the process of slashing their workforces in half. They’ve already seen their market shares cut in half. These trends will not reverse themselves.