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Ouch, this brutal economy. Even relatively stable companies like Honda are adjusting to the fuel-saving, penny-pinching times by trimming capacity and shifting production in favor of four-cylinders.

The Detroit News reports Honda will change its game plan for Accord, Odyssey, Pilot, and Ridgeline, shifting production of its V-6 and four-cylinder engines and those vehicles around to match market conditions.

Honda's Alabama plant will start producing V-6 Accords on one of its assembly lines in order to free up capacity at its Marysville, Ohio plant. That plant will then begin producing even more of the company's most popular model, the Accord four-cylinder. The engine for that model comes from its Anna, Ohio engine plant, which will also boost output to handle the increased Accord four-cylinder volume.

Elsewhere, the company will be reducing production of both V-6 engines and V-6-powered vehicles, whose sales have softened in the face of economic woes. According to Autodata Corp., Odyssey sales are down 14 percent, Pilot sales are down 17 percent, and Accord sales are up five percent in comparison with the first nine months of 2007.

Notably, these changes will increase the percentage of Accords that are American made, and cuts imports of Accords from Honda's factory in Saitama, Japan. As of September, according to Honda, more than 80 percent of Accords sold were American made. This is good news for American autoworkers, who elsewhere face bad news like the closing of GM's Moraine, Ohio plant (Chevy TrailBlazer, GMC Envoy, Saab 9-7X) on December 23rd.--Colin Mathews

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If a group of urban planners, actvists, and students, has its way, the college town of Ithaca in upstate New York could be the first  community in the U.S. to ditch cars in favor of automatically controlled "podcars."

As reported by CNN, podcars are "driverless, computer-guided" cars that have the advantage of taking 2-10 people exactly where they want to go, unlike mass transit that follows a pre-set course and stops at every station regardless of passenger load or desire. Ithaca has a history of progressive thinking where transportation is concerned, having recently begun a community-wide car sharing program.

Also known as PRTs (Personal Rapid Transit), podcars would operate "almost like an elevator, but horizontally," according to Jacob Roberts, president of Connect Ithaca, quoted in the same CNN article. He adds that the podcars would use only clean energy, and would serve stations located every block or half-mile. Riders would enter the podcar, punch in their desired location, and relax as the podcar delivers them, stopping only to drop off other riders to their requested destinations. The podcars themselves typically run along rails or an elevated guideway, but also have the ability to run at street level. A scaled-down version of this concept was used in 1975 in Morgantown, West Virginia, at West Virginia University. Those 15-passenger cars are still in operation today.

The point of podcar is twofold: reducing urban congestion and improving air quality. It is a popular concept in Sweden, where more than 12 cities are planning podcars as part of a commitment to be fossil-fuel-free by 2020.

Detractors like Vukan Vichic, professor of transportation and engineering at the University of Pennsylvania, feel the concept isn't workable. He claims in CNN's story that while cities would have the tax base to pay for such a project, there simply wouldn't be enough podcars to meet the needs of hordes of urban commuters. Conversely, he feels that podcar capacity would not be a problem in the suburbs but that low demand in those areas would never result in the kind of financing that would make building a podcar infrastructure feasible.

Nonetheless, the CNN story quotes capital costs of $25 million to $40 million per mile for the podcar, versus $100 million to $300 million for development of subways or light rail (numbers from Stockholm's IST - Institute of Sustainable Transportation). So if public transportation is one way to solve the increasing costs of automobile ownership and the looming nuisances traffic congestion and air pollution, perhaps podcars are a legitimate consideration.

Frankly, we shudder to think of cars where we are not allowed to do the driving. Gas/electric hybrids are already sadly lacking in the driver involvement arena, and the idea of podcars replacing the automobile entirely is the stuff of nightmares.

Not to worry - IST CEO Magnus Hunhammar claims that podcars are just one part of future transportation strategies, not an attempt to completely replace the automobile. With any luck, podcars will clear the roads of all the bad drivers and left lane hoggers, freeing the tarmac for those of us who love to drive and do it well.--Colin Mathews

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Automotive News reported yesterday that Japanese newspaper Nikkei and Japanese broadcaster NHK claim Ford is "close to selling most of its 33.4 percent holding" in Mazda. On the heels of record lows for Ford share prices and the broadening global credit crisis, Ford is considering all possible actions to keep its brand solvent and strong.

Both Ford and Mazda are mum on the subject. Ford spokesman Mark Truby claimed only that his company's relationship with Mazda has not changed, while Mazda stated flatly that "nothing has been decided." Highlighting the urgency with which Ford must act is Standard & Poor's consideration of further downgrades to Ford's credit rating this week, which would send it deeper into junk status.

Ford CEO Alan Mulally insists that filing for bankruptcy does not make sense to the company, and said they plan instead to focus on a company turnaround and exceedingly careful cash management. Regardless of whether or not Ford and Mazda part ways, the Nikkei newspaper claims that Ford and Mazda will continue to produce engines and vehicles together such as the corporate 3.7-liter V-6 found in the Mazda6 and Lincoln MKS.--Colin Mathews

General Motors and Chrysler have held discussions over the past month to merge the two companies, the New York Times and the Wall Street Journal reported late Friday evening.

The Journal says the deal would likely involve a swap of Chrysler assets held by Cerberus Capital Management, for the remainder of GM's finance arm GMAC that Cerberus does not already hold--49 percent of GMAC's shares.

The possibility of a merger is on hold because of the stock market's gyrations, the papers add, but a deal could be rejoined quickly if the markets stabilize.

A merger between GM and Chrysler would lead to radical, and permanent, changes in the U.S. automotive landscape. The companies have more than 100 factories and 11 brands, not to mention thousands of dealers, that would have to be rationalized to make money out of the merger. Other sources estimate GM could net $10 billion in savings out of a potential merger--but that would only happen after drastic cuts to the number of models the companies make, the number of plants they operate and the number of people they employ.

Both sources suggest Cerberus would end up taking an unnamed share in the combined GM-Chrysler.

The Times says a deal between the two is "50-50" and could take weeks to finalize. This week, GM has repeatedly denied it's considering a bankruptcy filing as its stock shares have been slammed, falling from $43 a share as a recent high to $4 a share this week.

As for Chrysler, it's been a continual source of speculation this year, as Cerberus--which owns an 80-percent stake in the company--faces another year of large sales drops. The Times reports Chrysler's parent has been hoarding cash that would otherwise have been spent developing new models, making it more certain that some kind of deal must be struck to give Chrysler a shot at survival. At the recent Paris auto show, sources suggested that Cerberus' recent moves to acquire the rest of Chrysler from Daimler AG would make it easier to package the company for a quick fire sale--something it's unable to do if it does not own the company outright.

Chrysler has also been exploring deeper alliances with Renault/Nissan. It has engaged that alliance to build a new small car for Chrysler--basically a rebadged Nissan Versa--while Chrysler provides Nissan with a next-generation Titan pickup spun from its Ram truck. The synergies from a Chrysler-Renault/Nissan deal, on paper, are far more uncomplicated than with GM. Chrysler's expertise in trucks, minivans and SUVs would have little overlap with Nissan's luxury, performance and small cars.

However, pressing financial concerns and the U.S. political season, not to mention the common Cerberus ties, could make a GM-Chrysler deal far more palatable. A merger between the companies may sail through federal approval, since GM and Chrysler's market shares are hitting historic lows. GM controls 22 percent of the U.S. market, while Chrysler holds 11 percent. Rival Ford Motor Company has hovered around 13 to 15 percent in 2008, with a downward trend. A deal would also ensure GM remains the world's largest automaker, outgunning Toyota and controlling 35 percent of the U.S. market for new light vehicles.

Ford Motor Company's chief financial officer, Don Leclair, is retiring as the automaker faces the bleakest times since at least the late 1970s.

Leclair worked for the second-largest domestic automaker for 32 years, joining in 1976. He has served as the CFO since 2003.

Leclair, 56, has the unusual distinction of being replaced by someone older than he--59-year-old Lewis Booth. Booth is associated with successful turnarounds at Ford of Europe and at Mazda.

Ford stock is trading at a little over $2 a share as the financial markets buffet auto stocks, and as the market reels from the impact of the gutting and reshaping of the banking and investment industries.