Ford Motor Co. (NYSE: F) will refit an existing truck plant in Michigan to manufacture smaller cars. Cost: $75 million. This comes on the heels of one of the worst years ever for large American automakers, which still can't cope with rapidly changing consumer desires for fuel-efficient transportation instead of gas guzzling SUVs and large trucks.

As Georges indicated recently, Ford will need massive plant retooling to get its bottom line back in shape as it produces the product mix consumers are looking for. This is a good step for Ford, even though it will be costly. The $75 million price is minor considering the cost of doing nothing.

Ford says the production of newer, fuel-efficient cars at the Michigan plant will begin in a few months, with completion sometime in 2010. It's also moving 1,000 of the employees from that plant to another one in Wayne, Michigan to increase production of the 4-cylinder Ford Focus sedan. Since Ford spent $300 million just three years ago to build the plant to be flexible, this should speed the conversion, according to the automaker.

It's just too bad that Ford can't unveil more small car production in November instead of just starting to convert a plant for a few years down the road.

I know, I know: forecasting the imminent demise of America's car companies is nothing new, but recent events have highlighted the kind of shortsighted planning that has plagued Ford Motor Company (NYSE: F) and General Motors Corporation (NYSE: GM) for years. While the gas crisis has exacerbated the shortcomings of the automakers, the companies' failures to understand their core audience, invest in R&D, and ensure the quality of their finished product are long-term, endemic problems that make them a very questionable bet.

Recently, for example, General Motors' decided to offer incentives, extended protection plans, and employee pricing to draw buyers to the line; these innovations, however, have had the added impact of massively undercutting revenues. As Williams-Sonoma could now point out, slashing your profit margin is not really the best way to make a profit. While their decision to get rid of Hummer should help GM shed a pricey and currently unpopular line, by the time the sale is finished, gas prices will be back down and everybody will be driving hydrogen-powered cars.

Ford, meanwhile, has decided to focus its attention on cars, a long-term plan that doesn't seem very well thought out. While the Mustang is, perhaps, Ford's most famous model, their trucks have long been an iconic symbol of the company. Rather than invest in making their strongest sellers more fuel-efficient and thus more attractive to consumers, Ford seems to be placing its eggs in a somewhat unreliable basket.

When Ford Motor Co. (NYSE: F) sends up its quarterly results tomorrow, the automaker is expected to report its third straight loss, due largely to falling truck sales. Two-thirds of Ford's business come from the sale of large and light trucks -- and that segment continues to see disastrous results as the bloodbath from rising gas prices gets worse.

Right now, the average price for 87-octane gas stands at about $3.50 per gallon, on the back of $119 crude oil barrel prices. Want more? Oil magnate T. Boone Pickens believes oil barrel prices are headed for $125. Who knows -- they could shoot past that. Are you looking forward to $4 per gallon gas this summer? Be prepared. And if you were planning on a Ford truck purchase and are now pulling back, you're probably joining hundreds of thousands of fellow consumers being swayed by record oil prices.

Toyota Motor Corp. (NYSE: TM) has moved into Ford Motor Co. (NYSE: F) sandbox and has started smashing Ford's mighty sandcastles. That's right -- Toyota trucks, notably the Tundra full-size pickup, are taking market share left and right in the state of all truck states, Texas.

Domestically, one in seven large trucks is sold in the state of Texas, and while truck sales from General Motors Corp. (NYSE: GM), Ford and Cerberus-owned Chrysler have declined 5% recently, Toyota's large truck sales have increased 79%. This is due in no small part to Toyota's aggressive incentive spending that really makes the Tundra look like a much-less-expensive but just as powerful option to competitor trucks.

GM has said in the past that it won't match Toyota's incentive spending but will rely on superior products instead. However, with customers tightening their wallets and consumer credit harder to come by, pricing does matter and Toyota is shipping up on the domestic truck makers. Sam Pack, who owns three Ford dealerships in Dallas, Texas, said that Tundra sales "are coming from traditionally Ford, Chevrolet and Dodge ... have they negatively affected Ford? No question they have.'' Ouch. Toyota also recently committed to a $1.28 billion manufacturing plant in San Antonio to make the Tundra. Does Toyota want to seize the full-size truck market? 100%. Absolutely. It now has the manufacturing location and incentive planning to do just that.

The Michigan auto industry has a reason to celebrate again, as Ford (NYSE: F)surpassed rival Toyota (NYSE: TM) recently in the J.D. Power and Associates' annual initial quality rankings for automobiles. In all, Ford grabbed more top individual awards than any other automaker, including Toyota and GM (NYSE: GM) among others. Does this signal something for Ford as CEO Alan Mulally executes on his plan to return the automaker to profitability by 2009?

Ford automobile owners are apparently having a doozy of a time with their new cars -- and they're reporting fewer problems during the initial 90 days or so of Ford ownership. Ford's last top showing in these awards was in 1998, when it tied for the top spot. Now, it has that mark all to itself.

While Toyota continues to sell quite a few cars, SUVs and trucks these days (it's now the largest global seller, ahead of even GM), Ford's customer-reported quality has crept ahead to make it better. With recent releases like the Mercury Milan and the all-new Ford Edge, Ford's product portfolio seems to be hitting on all cylinders here, with the company ranking highest in five of 19 segments in this year's survey. I have to agree with Ford spokeswoman Anne Marie Gattari, who indicated that all the new Ford vehicle launches so far this year "speak volumes about what we're doing right." Apparently, customers agree, and it shows in these J.D. Power and Associates rankings.