Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, February 12, 1995                   TAG: 9502100085
SECTION: EDITORIAL                    PAGE: G-2   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

CARMAKERS

Can they keep it up? For a while, probably they can.

First, much of the industry's improved performance is based on a general strengthening of the American economy that's expected to continue through 1995. Last year, Americans bought 15.1 million cars and trucks, the most since 1988. This year, even with the Federal Reserve's continuing to raise interest rates, the figure may top 16 million.

Second, some of the new profitability is attributable to adoption of management techniques that have served the Japanese so well. Apart from general economic conditions, such practices as "just in time" production and continuous improvement should keep enhancing U.S. carmakers' profitability

Even so, the big question - how well can profitability be sustained over the long haul? - remains unanswered.

It wasn't very long ago, after all, that the Big Three were posting record losses: As recently as 1991, GM's core North American Automotive Operations was losing nearly $1 million an hour. Moreover, the U.S. economy can't be expected to accelerate indefinitely; no economy does.

The Big Three have evidently relearned how to turn out products of a quality and at a price to attract domestic customers in an economic recovery. This is progress.

Still unanswered, though, is how well they've learned to compete abroad when overseas economies start to pick up again, and to appreciate the long-term importance of maintaining domestic market-share when the economy at home falters.