Gasoline prices continue to increase along with crude prices, and the latter seem to find a new record every single day. Wasn't it just a few months ago that the media was going crazy about oil reaching the $100 per barrel mark? It hit $122 this week. Now, that's not a year later; that's less than half a year later. It's not surprising then that automakers with an inflexible SUV-selling strategy are getting pummeled, while automakers with a decent offering of gas-efficient vehicles are seeing product mix changes in retail sales.

Ford Motor Co. (NYSE: F), which showed a surprising profit in its most recent quarter, said that it plans to really up the presence of gas-efficient six-speed transmissions by the end of 2009, and wants to have these transmissions in 98% of its North American vehicles by 2012. If Ford follows through with this commitment, it'll be a game-changer for the industry. And, it will force General Motors Corp. (NYSE: GM) to do the same thing. Ford stated that the newer 6-speed automatics will get 4% to 6% better gas mileage than the standard 4-speed and 5-speed automatic transmissions.

GM is not sitting idly by at the same time, though. It debuted a 6-speed automatic transmission in the popular 2008 Chevy Malibu, which it is pitting as a strong competitor to market leaders Honda Motor (NYSE: HMC) Accord and Toyota Motor Corp. (NYSE: TM) Camry. Will the new trend in the consumer vehicle market be smaller 4-cylinder engines with advanced, fuel-efficient 6-speed automatic transmissions? You can count on it until oil prices fall to $50 a barrel. And, that'll be when pigs fly.

Can General Motors (NYSE: GM) and Ford (NYSE: F) make a good car? After years of claiming that they can't make money with passenger cars, American automakers are finally taking the car market seriously. The fat years of making glorified pickup trucks tricked out with leather seats and premium sound systems -- better known as SUVs -- are now over, and Detroit finds itself in a bit of a pickle. The Americans may have ignored the basics of making well-designed cars, not gas-guzzling trucks, for so long that they may not be able to catch up with the leaders, Toyota (NYSE: TM) and Honda (NYSE: HMC).

The problem is that foreign automakers now have an enormous lead in design and manufacturing expertise when it comes to passenger cars. The Toyota Camry and the Honda Accord have long been the leading sedans in the U.S., and for good reason. They are roomy, comfortable, very well designed and made, and reasonably efficient. Their surprisingly powerful yet nearly silent engines last for hundreds of thousands of miles, which helps maintain resale values. And they are profitable: Toyota reportedly clears $1,000 per Camry, and with 400,000 Camry sedans sold last year in the U.S., that's a good chunk of change that any car company would be happy with.

Nevertheless, the competition for sedan sales is heating up. As The Wall Street Journal reports, GM is pushing the Chevrolet Malibu as an American alternative to the Camry and the Accord. Ford, too, is entering the fray, changing the name of the Ford 500 to the Taurus in an effort to recapture the glory of that hallowed name. (I think this shows just how desperate Ford is, given that the Taurus' glory days were in the 1980s and that the car sold so poorly in recent years that it was terminated.)

But it may be too late. As John Casesa, a former Wall Street auto analyst, says in the Journal piece, "The ship has sailed in the midsize sedan segment . . . Camry and Accord are now established titans in that part of the market." Even worse, Detroit may not be able to rule the second tier under Toyota and Honda. Other foreign manufactures, including Nissan and Hyundai, are making very good cars these days. Starting at under $18,000, Hyundai's Sonata sedan is a particularly strong alternative to the Camry and the Accord. So there isn't much room for the Malibu and the Taurus. It looks like Detroit may pay the price for ignoring cars so long for many years to come.