Driving Forces: Driving Through the Looking Glass

Greetings from the Alice in Wonderland Auto Show in Detroit. On one end of this city’s aging conference center, General Motors, maker of the hulking Hummer, is generating buzz with its 150-miles per gallon hybrid electric concept car, the Chevy Volt . At the other end, Toyota, best known for its gas-sipping Prius, has rolled out an enormous pickup truck that will guzzle a gallon of gas every 17 miles or so. The car business, it seems, has driven through the looking glass.

As strange as all this sounds, 2007 is the year of role reversals in the car business. After all, this is the year when most analysts figure Toyota will overtake GM to become the world’s largest automaker. But GM—emboldened by signs of a nascent comeback—isn’t conceding. “We’re not giving up just because somebody got a calculator for Christmas and worked some numbers,” says GM CEO Rick Wagoner. “This is going to be a dogfight.” Toyota, meanwhile, is so worried about a patriotic backlash from U.S. consumers that it is resisting declaring victory, with head-spinning rationale that would do Alice’s Cheshire cat proud. “People like a winner,” says Toyota executive vice president Jim Lentz, “but they don’t care who is No. 1.” (Don’t try selling that to Boise State fans.)

Driving the anxiety that lurks beneath this show is uncertainty over where American car buyers will turn next. When gas prices spiked above $3 a gallon last summer, small cars and hybrids were all the rage. Lately, though, with gas free-falling back to $2 a gallon, SUV and truck sales are picking up and hybrids are stalling. “We’re dealing with the schizophrenia of the American public,” says GM car czar Bob Lutz. “The problem is that Americans want power and performance, and at $2.20 a gallon no one cares about the fuel bill.”

Of course, if pump prices go back to three bucks, everyone will care again. So automakers are hedging their bets all over the auto show floor. A few steps from that shocking Chevy Volt is a steroidal 400-horsepower Camaro convertible, with a flaming orange paint job and huge 22-inch wheels. At the Ford stand, a space-aged hydrogen-powered Airstream van is parked across the aisle from the Ford Interceptor, a retro muscle family car that seems to gun its monster engine on the hour. As for Toyota? Parked beside those hefty pickup trucks is its sleek little FT-HS hybrid sports car that’s all about making green autos cool.

The split personality of the auto show says a lot about where the industry is heading. Rather than trading places, the world’s automakers are actually converging. Each wants what the other has. That’s why Toyota is trying to double its market share in the U.S. pickup truck market that Detroit dominates. And it’s why GM is playing catch-up in the hybrid market that Toyota owns. “It shows,” acknowledges Wagoner, “that we’re more alike than we are different.”

So how to stand out in this me-too market? At this show, the answer seems to be technology. To Ford, that means hooking up with Microsoft to come up with Sync, a hands-free communications system in your car that allows you to simply speak into thin air to phone someone; your text messages are also read to you over the stereo speakers, and all the songs in your iPod are recognized and played by your radio. To Chrysler, it means a minivan that displays digital pictures in the dash and has second-row seats that swivel backward to create a living room on wheels. To GM, it means an electric car that plugs into your wall outlet and never runs out of juice because a tiny engine under the hood recharges your batteries, enabling you to go 150 mpg or more.