CHICAGO (Reuters) - President Barack Obama has decided to launch a government task force for restructuring the struggling U.S. auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said Sunday.

Obama is appointing Treasury Secretary Timothy Geithner as his "designee" for overseeing auto bailout loans and as co-head of the new high-level panel together with White House economic adviser Lawrence Summers, the official said.

But Obama, who took office on Jan. 20 and last week won congressional approval of a $787 billion economic stimulus program, has dropped the idea of having a single appointee empowered to handle the politically sensitive task of revamping America's once-mighty auto sector.

"There is no 'car czar,"' the official said, speaking on condition of anonymity.

There was no immediate word on when or how Obama, due to return to Washington on Monday after spending the long Presidents Day holiday weekend back home in Chicago, planned to unveil his strategy for dealing with the auto crisis.

But General Motors Corp (nyse: GM - news - people ) and Chrysler LLC, are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving $13.4 billion in emergency aid in the final weeks of the Bush administration.

Top Cash-Back Car Deals

Battered dealers this month are offering unheard-of buyer incentives.

In Depth: Top Cash-Back Car Deals

The retail industry isn't the only one luring shoppers withhefty discounts. Battered car dealers this month are offeringunheard-of cash-back deals--in some cases up to 30% off the MSRP.

Detroit'sBig Three in particular are offering buyers thousands of dollars incash, including $8,000 in total rebates to qualified buyers of Chevrolet's Tahoe and Suburban models. Those who buy a 2009 Mercedes CLK get $6,000 cash back. Drive off with a 2008 Saturn Vue XE and pocket $3,750. To expedite the sales process, cash-back incentives are usually applied directly to the purchase price.

n short, there has never been a better time to buy a new car.

In Depth: Top Cash-Back Car Deals

But don't get too comfortable with all that green. Automakers--notably Chrysler and General Motors (nyse: GM - news - people )--willlikely put the brakes on their incentive offerings this spring as the$17.4 billion rescue package begins to lessen their financial strain.

"Thesedeals won't be as plentiful going forward, as lots of the '08 stockwill be done in '09," says Jessica Caldwell, manager of pricing andindustry analysis for auto data source Edmunds.com. "There probablywon't be a time as good as this. Things will plateau, and there willstill be a lot of deals available, but it's going to look a little lessrosy."

Behind the Numbers
To find the best cash-back deals available, we used data from Edmundsand Cars.com, a Web site that provides auto advice. We sifted throughincentives offered on thousands of 2008 and 2009 models and thenselected vehicles with a high ratio between the amount of cash offeredand the vehicle's MSRP. A cautionary word: Incentive programs vary byregion and state, and many expire quickly.

Dealerincentives from manufacturers to dealerships reduce a dealer's cost ofbuying the car from the factory and are offered on a regional basis togenerate sales on specific models. Customer incentives involvecash-back rebates, low-interest financing or other perks offereddirectly to buyers.

According to the White House plan to aid General Motors and Chrysler with money drawn from the $700 billion fund voted by Congress, Treasury Secretary Henry Paulson will temporarily oversee loans to the two ailing auto giants.

After Jan. 20, President-elect Obama will need to choose his own more permanent overseer. This person, identified as "the president's designee" in the failed Auto Industry Financing and Restructuring Act, is now widely referred to as the "car czar."
 

The imagery and reality of a car czar is fraught with problems. First of all, under what authority will this person be able to orchestrate sacrifices required by the carmakers, United Auto Workers, bond holders, and suppliers to make the loan recipients economically viable and competitive by March 31? It is by no means clear what power, apart from personal suasion, such a person would have to resolve disputes and align interests among key stakeholders during the coming months.

Furthermore, arriving at a plan for economically viability by March 31, as stipulated by the White House, will not save loan recipients from bankruptcy unless the financial community judges the carmakers' debt to be commercially bankable. This final and most important judgment is not for the car czar, the White House or even Congress to make.

So, with little formal authority to force changes in a 50-year-old business model and an extremely limited role in certifying the economic viability of business plans submitted by loan recipients, how can the car czar truly be a czar?

What's even more problematic is that the concept of a bridge-loan program with or without a car czar has a dream-like quality in the absence of an economic stimulus program that gets fast traction and an immediate increase in the availability of consumer credit.

Unless the volume of car and truck sales recovers to the industry's current break-even point of 14.5 to 15 million units per year from its current run rate of around 11 million units, the Big Three cannot remain solvent--czar or no czar. There is no near-term financial problem facing General Motors (nyse: GM - news - people ), or any other automaker, that a surge in volume wouldn't cure.

Ford Motor is suffering from guilt by association. The automaker has $15 billion or so in the bank and billions more in credit lines, is not looking for a year-end bailout and still gets splashed with mud. Every day I hear the TV news people, the stars like CNBC's Maria Bartiromo, lump General Motors, Ford and Chrysler together as facing bankruptcy. In Ford's case, this is just not true.

Alan Mulally, the chief executive Ford imported from Boeing (nyse: BA - news - people ), has moved smartly since he gave up his wings. He mortgaged assets (for $24 billion) and signed up credit lines two years ago before all the current turbulence.

He also sold Jaguar, Land Rover, Aston Martin, some of Ford's Mazda (other-otc: MZDAF.PK - news - people ) stake and has put Volvo on the block. You can disagree or agree, maybe some of these operations could still have turned into winning assets, but Mulally decided Ford did not need the problems right now.

Unlike GM, Ford has no surplus car lines, which means it avoids both heavy spending to keep too big a lineup up-to-date and endless lectures from Wall Street know-it-alls who say to get rid of them. Excluding Volvo, which Ford hopes to sell, and Mazda Motor, in which it has only a minority stake, Ford has only two dealership channels in this country: Ford and Lincoln/Mercury.

Both Ford and GM are unlike Chrysler in that they have robust foreign operations. For Ford, Europe and South America earned $2.5 billion pre-tax in the first nine months this year. Those markets are slowing, yes, but they are strong businesses. Europe is providing the small-car knowledge and engineering that Ford needs in the U.S.

Yes, Ford has asked for a government-backed credit line, just in case the economic downturn gets much uglier, and is asking for some of the government cash that Congress already appropriated for updating plants and making fuel-saving vehicles. On the other hand, Ford is not begging for an immediate cash infusion to keep it afloat.

Long run, Ford has the ability to grow. For the past two months the Dearborn, Mich., manufacturer has held its own in share against the prior year, while the others slipped. The company even picked up share in November, to 16.4% of the industry sales versus 15.4% a year before. This is a good sign. If GM downsizes, Ford could end up bigger than GM in just a few years.

How Unions Stop The Cars

Big Labor is a big problem for automakers' survival.

With the late-night demise of legislation containing $14 billion in emergency loans to Detroit's automakers, pressure is once again mounting on President Bush to step in. And he is reportedly thinking of doing just that. But the very thing that doomed this legislation will also doom any effort to rescue the industry: union intransigence. If Bush cares more about taxpayers than kudos, he should decline.

The legislation, backed by Sen. Bob Corker, a Tennessee Republican whose state itself is home to GM facilities, was the industry's best hope to return to health. It stripped some of the green baggage of the House bill that would have consigned Detroit to producing not cars that sell but what eco-warriors want. Nor would the legislation have handed quite as expansive powers of micromanagement to a car czar, forcing companies to obtain approval for basic product and capacity decisions.

Instead, it offered the automakers a way to restructure their massive obligations to labor and debtors, much like a bankruptcy court would do but without the stigma. Bondholders would have been required to accept a 70% loss--the remainder paid in stock, not cash. And Big Labor's main concession (besides accepting some stock instead of cash for its health care trust fund) was that it set a definite date for a pay cut next year.

At that time, its wages and benefits would fall in line with those that Nissan (nasdaq: NSANY - news - people ), Toyota (nyse: TM - news - people ) and other automakers pay their U.S. workers.

But the United Auto Workers reacted as if it had been asked to work in a Third World sweat shop and walked away. Sen. Debbie Stabenow, D-Mich., decried efforts to "sock it" to American workers. Never mind that labor costs make every car rolling out of Detroit $1,500 more expensive to produce than foreign cars made elsewhere in the U.S. Indeed, last year, GM and Toyota sold the same number of cars worldwide, but Toyota turned a healthy profit--while GM posted a $40 billion loss.

But the fact of the matter is that the wage cuts are a necessary condition to give Detroit a fighting chance for survival, but they're not sufficient. Indeed, that would require far more from unions.

Car sales next year are expected to drop 40%. This means that if auto companies are going to use any bailout money to restore viability, they will have to be able to shed some of its quarter-million-strong workforce.

However, if the UAW was unwilling to accept a pay cut, there is no reason to believe that it would compliantly accept such massive layoffs. More likely, it will use taxpayer money to keep every job alive as long as possible--and then return for more a few months later.

Beyond job cuts, the UAW will also have to agree to eliminate a whole host of exceedingly rigid work rules for its remaining constituents. Such rules, for instance, had historically made it difficult to train auto workers for multiple jobs to fulfill multiple needs. No less than labor's extravagant wage demands, these rules have crimped Detroit's adaptability.

Ford recently built a facility in Brazil where it can produce five different vehicle platforms at the same time, on the same line. What's more, many of its suppliers are housed in the facility as well, something that allows them to move parts to the assembly line at a moment's notice. Not only has this lowered Ford's production costs and boosted productivity, it has also given it flexibility to adjust its product mix to shifting market conditions. This is important at any time but is especially crucial now, when volatile oil prices are likely to produce abrupt shifts in consumer demand.

But union rules, with their featherbedding requirements and crabbed job descriptions, make it much harder for such a factory-of-the-future to operate in the U.S.

The irony is that foreign car makers are profitable in America--and the Detroit Three are profitable in every country but America. Only Big Labor can position Detroit carmakers for success in their own country. Bush shouldn't ask already-strapped taxpayers to make sacrifices to pull Detroit back from the precipice when its own key stakeholder won't.

Shikha Dalmia is a senior analyst at the Los Angeles-based Reason Foundation. She can be reached at shikha.dalmia@reason.org.

Looking for an upside to the downturn? Check out the auto showrooms.

If you qualify for a car loan (credit score above 500 and proof of employment), deals can be had. Thank the recession, the meltdown of Detroit's Big Three and the downward spiral in consumer confidence.

"If you are a bargain hunter, there has never been a better time," said Philip Reed, senior consumer advice editor for Edmunds, which specializes in consumer automotive information. "If it gets any better, they will be giving cars away. In the cases we are looking at, it's 25 to 30 percent off sticker price."

But before you run out, be warned: There are no giveaways. And if you're looking real cheap, you'll be hard pressed to find a car below $10,000 -- except for a bare-bones Nissan Versa without air conditioning. Even your basic Toyota Yaris -- known as a "price leader" designed to draw customers -- runs $11,390 on the Darcars Toyota Silver Spring lot.

The best deals go to those who can pay cash. If you are borrowing at zero percent interest, which is making a comeback, most dealers will not give you as big a break on price because the zero-interest loan is looked upon as the bargain.

"It all comes down to how much you finance," said Ethan Rossignol, general sales manager at Darcars Toyota Silver Spring. For those borrowing money, a credit score over 700 will probably bring an interest rate in the 5 or 6 percent range, said Al Toueg, general sales manager at Buick Pontiac GMC on Nicholson Lane in Rockville, part of the Fitzgerald Automalls network. The lower your credit score, the higher the interest rate. A credit score of around 600 might cost the buyer an annual interest rate of 8 or 9 percent. People in the 500 range will have trouble getting approved.

With car sales expected to hit 13 million this year compared with 16 million last year, dealers have thrown out the book on showroom economics. Profit margins, which is the amount they keep on each car, are thin or almost nonexistent.

The margin is normally someplace between what they pay for the car ("invoice price") and what they would like you to pay for the car ("sticker price" or "manufacturer's suggested retail price-MSRP"). That margin can range from $300 on a Toyota Corolla to a few thousand on GMC's lumbering Denali sport-utility vehicle.

Darcars' Rossignol swears he is losing money on some small cars.

Take a Toyota Corolla, one of the hottest selling cars in the country. Rossignol sells a Corolla with power locks and windows, an automatic transmission and air conditioning. Its invoice price is $16,522. The MSRP is $17,865, which is what Toyota suggested he get for it. That would have given him a $1,300 profit. The car's price: $14,790. Even if the manufacturer gives him some extra cash for the Corolla -- known as "dealer cash" -- it's likely that Rossignol will make little or nothing on the sale. A year ago the car would have probably fetched more than its $16,522 invoice.

"Six months ago, you had zero incentives," Rossignol said. "Now you have a choice of $1,000 customer cash or zero percent financing. Incentives from the manufacturer is something that we have never seen. And Toyota has never, ever put zero percent [interest rates on loans] like it just did. Now we have zero [percent loans] on 12 models."

General Motors, which says it will soon fail if it doesn't get billions in government loans, is knocking thousands off its prices to bring in customers. The bigger the car, the bigger the deal.

"A business model based on gas -- a gas-guzzling past -- is unacceptable," Sen. Charles E. Schumer (D-N.Y.) said last week. "We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car."

But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a "sustainable U.S. auto industry" that President-elect Barack Obama and most members of Congress say they want to create.

That's because car manufacturers still haven't figured out how to produce hybrid and plug-in vehicles cheaply enough to make money on them. After a decade of relative success with its hybrid Prius, Toyota has sold about a million of the cars and is still widely believed by analysts to be losing money on each one sold. General Motors has touted plans for a plug-in hybrid vehicle called the Volt, but the costly battery will prevent it from turning a profit on the vehicle for several years, at least.

"In 10 years are they [at GM] going to solve the technological problems with respect to the Volt? Sure," says Maryann Keller, an automotive analyst and author of a book on GM. "But are they going to be able to stake their survival, which is really more of a now to five-year proposition, on it? I'd say they can't. They have to stake their future on Malibus, the Chevy Cruze, and much more conventional technologies."

U.S. automakers faced a barrage of demands last week that they provide evidence and assurance that they would use federal bailout money to transform their companies to produce automobiles of the future, using advanced technologies and featuring hybrid or plug-in vehicles. And in his "60 Minutes" interview on Nov. 16, Obama said that before backing a big loan package he wanted to be sure "that we are creating a bridge loan to somewhere as opposed to a bridge loan to nowhere."

But there's no guarantee that the new business model would be any more viable than the current one. Automobile experts estimate that the battery in a plug-in vehicle could add at least $8,000 to the cost of a car, maybe considerably more. Most Americans will be unwilling to pay the extra price, especially if gasoline prices languish around $2 a gallon.

That's why one of the mysteries about GM's plans to introduce the Volt in 2010 is how much it will cost to buy one. "What's the Volt going to cost? I would be happy to answer that if you can tell me the price of oil in 2010," said Robert A. Kruse, GM's executive director of global vehicle engineering for hybrids, electric vehicles and batteries. "I can tell you to the penny what it will cost GM, but pricing is much more related to market conditions."

The hurdles ahead for the Volt and other cars with new technologies pose dilemmas for automakers trying to gauge a market that is still very young for cars that don't exist while trying to stay in business during a downturn.

"These are hard choices," said Toyota chief technology officer Bill Reinert, part of the Prius design team. "Do you bet on lighter, smaller, more fuel efficient but ultimately less profitable cars or do you hold back a little on technology development and look at new versions of existing cars."

Many experts say that gas guzzlers will not fade away as long as Congress fails to impose higher taxes on gasoline to steer people toward fuel-efficient cars.

"You'd think from reading the media that we have had a burial ceremony at Arlington cemetery for the last pickup truck," said James Womack, a management expert who has written about the automobile industry. "I can easily imagine three years from now when public is focused on a new set of priorities . . . that this whole thing would go poof."

Porsche SE released details on Monday on its Panamera four-door sports car, which will be the fourth vehicle in the German luxury carmaker's lineup.

Porsche said it will build the Panamera at its plant in Leipzig, Germany. The car will make a world debut in the spring of 2009 and will hit U.S. dealers that fall, the company said.

The teardrop shaped Panamera will sit wider and lower than comparable four-door models, Porsche said, and sports front air intakes instead of a traditional radiator grille.

The car's engine will come in either a V-6 or V-8 configuration, and will have an output range of between 300 and 500 horsepower. The company said it will also release a more fuel-efficient version with a hybrid powertrain.

The Panamera will also feature all-wheel or rear-wheel drive models. It will release more details, including pricing and other vehicle specifications, in the spring.

Sales of Stuttgart-based Porsche have fallen alongside the broader industry, tumbling 23 percent so far this year. However, the company reported earlier this month its fiscal-year profit rose 52 percent on gains from its stake in Volkswagen AG.

The NHTSA ranks the Volkswagen Jetta as one of the top safest small cars.

So, automakers responded -- and as a result, cars and trucks are much safer today than they were 30, 20, even 10 years ago.

One car segment that has especially benefited from this overall improvement in safety is the sub-compact category. And it's a good thing, too, because as gas prices have soared in the last two years, more buyers are turning away from big trucks, monster SUVs and gas-thirsty muscle cars in favor of smaller, more fuel-efficient vehicles.

Indeed, the small-car category is the fastest-growing segment in the U.S. auto industry, with sales increasing by 12 percent this year, and everyone expects that growth to continue as long as gas prices keep rising -- or even if they just hold steady and don't drop. That's why many automakers have even more sub-compact models in their product pipelines.

So, as Americans' buying preferences have shifted to smaller vehicles, the old debate about the safety of small cars has ignited anew. Some drivers who've been in an SUV for the last six years have been apprehensive about not being surrounded by a massive steel structure and a few dozen feet of sheet metal.

But those who have been forced to "go small" for economic reasons can take comfort in the fact that small cars are much safer today than they were just a decade ago. AOL Autos: Cars with the lowest ownership costs

According to the most recent available data released by the Insurance Institute for Highway Safety (IIHS), the death rate in the smallest cars on the road has dropped to 106 per million registered vehicles, a significant drop from the 165 per million in 1996.

And today, 14 of the 17 top-selling small cars receive good frontal crash test ratings from IIHS, says Adrian Lund, IIHS president. A decade ago, none did. "That's obviously a huge improvement," stresses Lund. "Small cars are indeed much safer now than they were just a decade ago."

The IIHS is a non-profit group, funded by auto insurers, that conducts research on "how to prevent damage and injuries and deaths" in auto accidents, says Lund. AOL Autos: Most popular fuel-efficient cars

"There have been many new technological developments over the last 10 years, and all small cars now have front air bags, many of them have side air bags with head prevention, and many are getting electronic stability control," Lund continues.

"Plus, due to the crash testing conducted by us and by the National Highway Transportation & Safety Administration (NHTSA -- a division of the Department of Transportation), many of the automakers have improved the structural design of the passenger compartment -- which means there is less 'intrusion' into the compartment than there used to be if a crash occurs."

Here are six of the safest small cars on the road, according to NHTSA, which gave all six a frontal-crash-test rating of five stars, the organization's highest rating. AOL Autos: Safest small cars

Ford's small-car entry, the Focus, followed right behind these models, as far as NHTSA is concerned, with a four-star frontal-crash-test rating.

IIHS uses a different system of rating vehicles' crash-test results than NHTSA. And to illustrate the improvement in small-car safety, IIHS compared some current models to older models from the same car maker.

The current Chevy Cobalt, for example, got a "good" overall frontal-crash test rating from IIHS -- the organization's highest rating. Comparatively, the old Chevy Cavalier, which was produced from 1995 - 2005, received a "poor" overall frontal-crash rating. AOL Autos: Four fast cars for under $30,000

"The overall frontal rating," explains IIHS spokesman Russ Rader, "is based on the individual scores for each of the parameters we measure in the test -- such as the performance of the vehicle's structure; injury measures to the head, neck, chest, legs and feet, and the dummy's movement during the test."

Meanwhile, the old Dodge Neon (1995-'99) received a "poor" overall frontal rating, while its replacement, the current Dodge Caliber, scores a "good" rating from IIHS. AOL Autos: Best-selling small cars

And according to IIHS results, the Ford Focus's frontal-offset crash-test results have remained steady -- it received a "good" rating in that category from 2000-'08, although its 2000-'07 models received a "poor" rating when it came to side-impact tests when tested without the optional side airbags.

One car company that has emphasized the safety of small cars in recent years is Honda, which launched its "safety for everyone" initiative in 2003. As part of this initiative, the company announced the development of Advanced Compatibility Engineering (ACE) body structure, which bolstered occupant protection.

"The 2009 Fit will be the latest small model to get ACE when it goes on sale in the next couple of months," says company spokesman Chris Martin. "With the intro of the new Fit, over 94% of Honda's sold in the U.S. will have the Advanced Compatibility Engineering technology."

A couple of years ago, automakers also adopted an initiative that will improve the safety for small-car drivers by agreeing to build trucks and SUVs with lower front ends.

"This should address the incompatibility between cars and trucks, says Lund. "Trucks have always ridden higher than cars -- which makes them inherently more dangerous to drivers of smaller cars in the event of an accident. So, by next year, we'll be seeing light trucks with lower structures," says Lund.

"In the event of an accident, that means that the front end of the truck will hit the bumper or door sill of the car, instead of hitting the car higher up, like in the passenger compartment, which in the past, has made drivers of small cars much more vulnerable to injury."

But, even though small cars have made big safety gains, it is true that big vehicles are still safer than small ones.

"The risk of dying in the smallest car, compared to the largest car, is still 2-to-1," says Lund. "But, now that people are being forced to make the switch to smaller vehicles due to economic considerations, with fuel prices being so high, it's a comfort for them to know that the smallest cars are so much safer than they were 10 years ago."

The current trend toward buying smaller vehicles also prompts Lund to point out that, "if you do want or need to go with a smaller car, it is important to pay attention to its crash-test ratings."

New technologies can help avoid accidents or even maximize fuel economy. But even the most advanced cars are only as smart as the driver.

In Pictures: How Smart Is Your Car?

Imagine this: Your car has a computer system that not only knows your destination but automatically maintains a steady, gas-conserving pace that's perfectly timed with the moment you reach an intersection 30 miles away, just when the light turns green.

Or, better yet, the car also has a comprehensive collision-avoidance system that detects and averts a crash even before you're aware of the impending danger, ensuring that you make it to that intersection.

This may all sound like fantasy technology, but they're just the types of ideas that participants at the 15th Annual World Congress on Intelligent Transport Systems will discuss when they meet next week (Nov. 16-20) in New York. While collision-mitigation systems and "greenwave" traffic-monitoring technology are still being explored and tested, there are other cutting-edge technologies and conveniences available today that make cars smarter than ever--many of them introduced at conferences such as ITS.

In Depth: Smart Features On Today's Cars

Toyota (nyse: TM - news - people ), for its part, is presenting findings on various systems it is developing, including a brake system that alerts the driver about an upcoming intersection with a stop sign. If the driver ignores the stop sign, the system kicks in and applies brake pressure to avert an accident. At ITS, auto industry figures "learn what new safety technology is on the horizon," says Brian R. Lyons, safety and quality communications manager at Toyota Motor Sales.

Some technology is relatively simple in terms of the convenience or experience it provides but can wind up having a much more positive effect. An example of this is integrated support for portable devices, which allows drivers to connect, say, an iPod to the car's audio system and operate it through the car's controls. Sure, a feature such as this provides a better listening experience, but the real benefit is that drivers spend less time fumbling with the iPod and more time focusing on the road.

ISuppli, a California-based electronic industry analysis firm, forecasts that in 2009 more than half of all passenger cars will offer optional iPod support (it was just barely one-third in 2008). In addition, one-third of all 2009 vehicles (only 16% in 2008) will offer USB interfaces for connections with portable devices like other types of MP3 players and flash drives.