June 4 (Bloomberg) -- Ken Thompson never had much trouble selling Silverado pickups at Classic Chevrolet in Grapevine, Texas, the largest U.S. truck dealership. Today, at the 23-acre, 2,000-vehicle lot near Dallas, customers walk away from deals at $16,988, a third off the sticker price, he says.

``It's the deepest discount we've seen in many months,'' says Thompson, the manager of fleet sales. The problem isn't sticker shock, he says. It's pump paralysis. ``You fill up one of these and it costs over $100,'' Thompson says.

Multiply Classic's slump by declines at the 14,293 other General Motors Corp., Ford Motor Co. and Chrysler LLC dealerships in the U.S., and the scale of the financial disaster facing them emerges. Pickups and the larger lines of sport- utility vehicles aren't just Detroit's biggest chunk of revenue, they have generated almost all of the industry's operating income, says John Casesa, an analyst for Casesa Shapiro Group in New York.

``For the last 20 years, pickups and sport utilities have more than made up for losses on all Detroit's other vehicles,'' Casesa said. ``It's unbelievable to watch a whole way of doing business change so drastically.''

In the face of $4 a gallon gasoline, ever bigger, ever more luxurious pickup trucks and large sport-utility vehicles no longer capture the imaginations or disposable incomes of American consumers. Should this year's sales trend continue, GM, Ford and Chrysler would sell 1 million fewer of these truck- based vehicles annually, forgoing as much as $10 billion in pretax profit.

Plant Closings

GM, the biggest U.S. automaker, said yesterday it will close four North American pickup and large SUV factories, cutting capacity by 700,000 vehicles a year. As it repositions away from trucks, Detroit-based GM said it will add 200,000 units of new car production. It also said it may revamp or sell its Hummer brand of SUVs.

The surge in fuel costs is ``a structural change, not just a cyclical change,'' GM Chief Executive Officer Rick Wagoner said yesterday. Just last month, Ford CEO Alan Mulally declared the consumer shift away from trucks ``a fundamental change.''

Sales of full-size pickups fell 36 percent in May and of large SUVS, 42 percent, automakers said yesterday. Total vehicle sales dropped 11 percent, the biggest decline this year.

Challenge to a Mainstay

Shares of GM, down 30 percent so far this year, fell 22 cents to $17.36 at 12:30 p.m. in New York Stock Exchange trading. Dearborn, Michigan-based Ford is off about 1 percent since the beginning of the year, and slid 4 cents to $6.64. Closely held Chrysler, based in Auburn Hills, Michigan, is 80.1 percent owned by Cerberus Capital Management.

Not since the 1980s, when Toyota Motor Corp.'s success with economy models prompted American companies to downsize their cars, has Detroit faced this kind of challenge to a mainstay, analyst Casesa says. The switch to smaller cars then was generated by sharp price increases by oil-producing nations and supply interruptions that doubled the cost of gasoline.

Today a similar shift in American buying patterns is taking hold, again driven in part by gas prices.

This time, the downsizing is also being influenced by concern that fossil fuels contribute to greenhouse gases. While trucks sales dipped, Ford yesterday reported that purchases of its Focus small car gained 53 percent and of Fusion mid-sized sedans, 27 percent.

`No Bubble'

Lehman Brothers, the New York investment bank, is forecasting 2008 sales of a little over 1.5 million pickups, 35 percent off from average annual sales for the past five years of about 2.3 million. Deliveries of SUVs in 2008 will drop 31 percent to 462,000 from last year's 665,78l, Lehman estimates.

At the current rate, Ford would sell about 600,000 pickups this year, down about a third from a record 939,000 in 2004. Revenue would fall by anywhere between $5 billion and $10.9 billion, according to Edmunds.com, based on invoice prices that dealers pay Ford ranging from $16,818 to $36,203.

``This isn't a bubble,'' said David Littmann, senior economist for the Mackinac Center for Public Policy, a nonprofit research group in Midland, Michigan. ``Unless there's a concerted political decision to go out and drill for more oil, the automakers will no longer be American. GM could have a hyphen in its name.''

Permanent Job Losses

The demand shift will result in permanent job losses as the Detroit automakers close truck plants that can't be converted to car production because of the different assembly techniques.

Ford last year shut a truck factory in Norfolk, Virginia, and a plant that assembles Explorer SUVs in St. Louis. It also announced May 30 it will invest $2.4 billion to convert its F- series pickup factory in Cuautitlan, Mexico, to make Fiesta subcompact cars, starting in 2010.

The collapse in pickup demand has hurt Japanese automakers as well, albeit less. Toyota, maker of the Tundra, and Nissan Motor Co., which makes Titans, sold 262,321 pickups in 2007.

Of the six top U.S. carmakers based on sales volume, only Japan's Honda Motor Co. has steadfastly avoided investing in large pickups or full-size SUVS. Honda instead built a lighter, more fuel-efficient small pickup, the Ridgeline. The model has sold 40,000 units a year since 2006.

Despite the U.S. automakers' unsuccessful record in small car sales, David Cole, head of the Center for Automotive Research in Ann Arbor, Michigan, said he's optimistic that Detroit will be able to profit from lighter, smaller, more fuel- efficient vehicles.

``The new labor contract last fall will allow GM, for example, to reduce the structural costs of making a vehicle in the U.S. to 23 percent from about 35 percent,'' Cole said. ``The domestic three are finally in a position to be profitable in vehicles they weren't before.''

To contact the reporter on this story: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net.

Last Updated: June 4, 2008 12:41 EDT