Image: 2008 Hummer H3s
David Zalubowski  /  AP file
David vs. Goliath: All it took to mortally wound the massive Hummer was a little gallon of $4 gas.
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updated 12/9/2008 7:35:34 PM ET 2008-12-10T00:35:34

Detroit auto executives delivered a plan designed to convince Congress — and consumers — that they're worthy of a $25 billion bailout that will help keep them in business. But some cars made by the big three — Chrysler, GM and Ford — are so unpopular with consumers that it's hard for many to consider the idea of keeping the automakers afloat with taxpayer money.

However, the big three do build plenty of cars that are enjoying strong sales even during the tough economic times (though 2.5 million consumers chose not to buy a car this year because of tighter credit and economic uncertainty). It's the automakers' poor performers that are helping drag down the industry.

Detroit automakers have been hit particularly hard because of the automakers' longtime reliance on gas-guzzling SUVs and big cars. Those models are seeing some of the worst sales, even with gas prices well off its July highs — currently at $1.70 per gallon on average in the U.S.

Market-research firm J.D. Power and Associates says 12.5 percent of GM's year-to-date sales were utility vehicles, compared with 5.9 percent of total sales for Toyota. But while Toyota's total sales are off 11.5 percent during the first 10 months of the year, GM's are down 20.4 percent.

The Hummer brand in particular, is too big, too expensive and too gas greedy for most of today's consumers. Hummer sales were off nearly 22 percent in 2007 compared with 2006, and when gas prices reached $4 a gallon this summer, Hummer's fate was sealed. Its sales were off nearly 49 percent during the first 10 months of the year, compared with the same period last year.

But as big a loser as Hummer has become for GM, the automaker does have a couple bright spots. The Chevrolet Malibu and Buick Enclave are both among the biggest winners. Sales of the Enclave, a new crossover introduced in 2007, are up 88 percent so far this year compared with the same time last year. The Malibu was redesigned in 2007 and has been a hit — sales are up 39 percent — among buyers who want a quality, fuel-efficient mid-size sedan packed with amenities and priced competitively.

What's Detroit's problem then? Along with unpopular models, it's the bad economy and tight credit, say experts, not poor quality.

"This perception of poor quality is an illusion at this point," says Stephanie Brinley, auto analyst at AutoPacific, an industry research and analysis firm. "Their cars are at least as good as the Asian makes in every comparison. The perception, however, still lags the reality."

To find Detroit's cars worth saving and worth writing off we looked at sales for the first 10 months of the year compared with the same period a year ago. Vehicles with the biggest sales gains so far this year and in 2007 (as well as 2006, if the car was in production) were considered. Vehicles that had sales losses greater than the industry average of 14.6 percent so far this year and sales losses in the previous two years were considered worth writing off.

Bad as things are for the Hummer, they're worse for some other models.

Just as the love affair with big SUVs like the Hummer began to slip, so it was for mid-size SUVs such as the Chevrolet Trailblazer and Ford Explorer. Both had been around since the 1990s, but more stylish crossover vehicles like the Buick Enclave, introduced in 2007, pulled away consumers.

Other older vehicles, like the Chrysler PT Cruiser (sales down 42 percent), are losers because they grew old and were never updated. Models like the competing Honda Element and Scion xB caught the eye of buyers looking for something new and trendy. Element sales are off this year, but only by half as much as the PT Cruiser's. The Scion xB's sales are up 8 percent.This is one example of an automaker that has learned at what point to cut its losses: Chrysler announced January that it stopped building PT Cruisers last December.

"It may be a missed opportunity for Chrysler," says Brinley. "[The PT] should have been updated in 2005, but no later than 2007. But instead they chose to stick with the basic package."

Unfortunately, Chrysler — nor GM or Ford for that matter — have the luxury of such missteps and are now fighting for survival. But some auto experts believe the winners outweigh the losers, and that Detroit is moving to eliminate the laggards. The big three, they say, are better positioning themselves with consumers, offering them the cars they truly need.

"There are bright spots with GM and Ford, and a couple with Chrysler," says Tom Libby, senior director at J.D. Power and Associates.

Even though gas prices are down, fuel economy is still top of mind for many drivers, and Detroit automakers do offer a few fuel-efficient cars that meet consumers' needs. One is the fuel-efficient Ford Focus, a small car that is experiencing double-digit sales growth this year (20.5 percent). And buyers who don't want to give up driving an SUV but want to conserve gas have looked to the Jeep Patriot (sales up 62 percent), which gets 23 mpg in the city and 28 on the highway.

While good fuel economy is a winning attribute, auto experts caution that consumers still want a quality car that looks good and meets their needs. The Cadillac CTS fills the role (sales up 15.2 percent) since it's an affordable luxury car. It's a direct competitor with the BMW 3 Series (sales down 17.5 percent), which gets roughly the same gas mileage but has a less-roomy interior.

Models such as these are keeping Detroit afloat for now and, very possibly, the future.

"They will hang on, and they will keep producing cars," says Libby of the big three. "They have more cars coming in 2009 and 2010 that meet the demands of today's consumers."

But that's only if they can hang on until then.

© 2012 Forbes.com

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