(FORTUNE Magazine) – When it comes to Detroit's Big Three automakers, UBS Warburg's Saul Rubin hardly seems bullish. He believes vehicle sales will continue to slow--possibly for years. He also argues that Detroit will lose even more market share in the future to foreign manufacturers. So we did a double-take in late January when Rubin upgraded General Motors (GM, $36) to a buy and set a price target for the stock of $50--especially because GM shares have fallen 47% since a mid-May high and it faces the above challenges plus another doozy: It has a deficit in its pension fund big enough to, well, drive a truck through. We sat down with Rubin to see if he needed his transmission checked. --Julie Creswell

What about this head-on collision GM is facing with its pension plan?

It's been said in jest over the years that GM is a pension fund with an auto business on the side. It's no longer a joke. GM has stock in its pension plan worth $40 billion--more than twice the value of its market cap. So any movement in the equity market has a direct impact on the value of GM. But at this point the pension problem is fully accounted for in GM's stock price.

Can they get under the hood and fix it?

I would say GM will have to put $20 billion into the fund over the next five years, and even then it will still have a deficit of $12 billion. But there's another solution--an equity offering.

Or selling Hughes Electronics, right?

A Hughes deal is going to be a part of GM's efforts to shore up its finances. This year, through operations, through the monetization of Hughes, through some other asset sales, GM could raise $8 billion to $9 billion of net cash flow. That would see them through with the pension fund this year and next.

You've emphasized GM's improved operations. What's going right?

Jack Smith, who is leaving this year, has been very persistent in revamping manufacturing. GM's North American plants run on the principles on which Toyota runs its plants. Besides savings from lean manufacturing, it also leads to a higher quality of output. GM came in third in the recent J.D. Power Initial Quality surveys. That's the first time one of the Big Three has landed in the top three.

How long can this 0% financing nonsense continue?

The carmakers are playing a dangerous game of chicken. Right now everyone is a loser. We have created something called the Agony-Ecstasy Meter that looks at the cost of incentives and what it really does for volume. The industry has been in agony for at least two years.

With Arianna Huffington piling on, will war in the Middle East kill SUVs?

The "Death of the SUV" article has been written over and over. But there's no reason to believe there' s any correlation between the price of oil and the desirability of SUVs.

But Leonardo DiCaprio drives an electric hybrid now.

Does DiCaprio drive an electric hybrid car? Well, good for him.