There are few more depressing spectacles in American industry than that of the wheels slowly coming off its once-mighty car industry.
In October, the 'Detroit three' - General Motors, Ford and Chrysler - held the lowest share of the US market ever, so when GM announced last week that it will cut a further 30,000 jobs and shut factories up and down the east of the continent, it was greeted with dismay but not much surprise. The world's largest carmaker is facing billions in losses this year as its market share drops and it is slowly throttled by rapidly rising health-care and pension costs for workers.
Since 2002, Toyota has pulled ahead of Ford and Chrysler by making good-quality vehicles people want to buy. As GM appears to slide inexorably toward bankruptcy, the Japanese carmaker has shown that the once-insular US car industry is now, like everywhere else, shaped largely by global competition. Next month, production targets for 2006 will show Toyota betting it can become the world's biggest car maker, usurping GM, which has been number one for 73 years.
But as the problems afflicting Detroit grow more severe, Chrysler is resolving many of its problems by doing something relatively unusual for a US car company - making desirable vehicles. Two models in particular, the 300C sedan and the Magnum estate car, have by themselves restored Chrysler to a status of desirability it has not seen since it made gas-guzzling muscle cars such as the Charger, Challenger and Road Runner in the late 1960s and early 1970s.
In that era, Chrysler's Mopar performance division produced the fastest, baddest, best-looking cars, outstripping anything Ford or GM was able to dream up. Even though mass-produced by the standards of European sportscar makers, Chrysler's muscle cars now go for turbo-charged prices, a 1970 Hemi Cuda recently fetching more than $2 million.
The 300C and Magnum recall that era, propelled by a high-torque 5.7 litre V-8 derived from a 1960s race engine. The models have the high door sills and gun-slit windows of a chopped-down hot-rod. Moreover, both are profoundly black in the sense of being African-American - the ride of choice for every urban tastemaker who, unlike Snoop Dogg and 50 Cent, cannot stretch to a Bentley.
Environmentalists will not approve - the two models are more efficient than sports utility vehicles (SUVs), but horsepower is again what distinguishes one make and model from another.
'It used to be that 250 horsepower was a lot, but now even our base 300C sedan comes with 340 horsepower,' says Mirko Kerschbaum, senior manager of Chrysler's street and racing technology division. 'The muscle-car era is coming back.'
Buyers dress up 300s with vinyl roofs and massive 22-inch wheels ('dubs') as soon as they are out of the showroom. Mechanically, the large, brick-shaped cars are close to Mercedes and quick - the 300C does 0 to 60 in 5.3 seconds and manages 25mpg on the motorway. So desirable have the 300C and its sister become that Chrysler has seen sales rise as the other US makers have lost custom.
Last month, in what is traditionally one of the strongest sales periods of the year, GM's sales dropped 25.6 per cent compared with October 2004 and Ford sales were down 26.1 per cent. Hardest hit were the big SUVs, on which Detroit based much of its resurgence in the 1990s, falling by half or more. Chrysler's sales, however, have risen. So far this year, the Chrysler Group has made $963 million (£560m) in profit - a sharp contrast to the billions lost at GM and Ford.
Chrysler's management says it understands that the success of the 300C and Magnum (as well as the new Charger and, it hopes, forthcoming Challenger) is down to design and affordability. But every silver lining has a cloud and one concern for DaimlerChrysler is that if the Chrysler models become too successful, they will start to cannibalise the sales of the combine's Mercedes brand.
Chrysler is known for rapid changes of fortune. In 1979, it was saved from collapse by a government-backed bailout, then invented the minivan and soared. The early 1990s were tough, followed by another boom that began losing steam not long after the 1998 merger that created DaimlerChrysler. Then came the new saloons and, although it faces many of the problems afflicting GM and Ford, Chrysler is riding high again. Simply put, it has always been the smallest of the Big Three, so it is burdened with fewer retirees.
However, Tom LaSorda, Chrysler's new chief executive, says this not the moment to relax. Sales of foreign cars are rising (Detroit has 53 per cent of the US domestic market, down from 80 per cent in 1989) and LaSorda says that rising health-care costs leave him no choice but to cut budgets, even with profit rolling in. 'When you're forced to do more with less,' he says, 'you'll get creative and innovative and do only the things that are important.'
For GM, the predicament highlighted by last week's job cuts and factory closures is well understood. The company is the largest private purchaser of health insurance in the US, footing the bill for 1.1 million workers, retirees and their families. So severe are GM's troubles that the company is being blamed for singlehandedly threatening to unravel the American industrial dream of a comfortable, middle-class standard of living for factory workers.
The auto unions say that making cuts is not the answer when so-called 'legacy bills' are getting larger - the company should design more attractive vehicles instead.
But the 'old three' carmakers can only look enviously toward Toyota. Not only have the company's sales risen but it is building new assembly plants in San Antonio and Canada. Considering Toyota didn't introduce its first car in the US - a poky four-door sedan called the Toyopet Crown - until 1958, the firm does not have the entrenched workforce burdens of US carmakers.
GM has more than 400,000 North American retirees, and $1,500 of the showroom sticker price of each of its vehicles goes towards meeting that financial burden. But Toyota only has 1,000 former employees to look after; the result is that the Japanese have a lot of additional money available to spend on product development. 'We are seeing a confrontation between the old and the new,' says David Cole, the director of the Centre for Automotive Research in Ann Arbor, Michigan.
GM chief executive Rick Wagoner has said he intends to follow the strategy of other American manufacturers such as IBM - move manufacturing out of the States and high-wage European nations and expand in China, South Korea and eastern Europe. But can the US manufacturers, including Chrysler, achieve this? At the very least, the current crisis has forced Detroit to consider a future beyond the petrol-guzzling SUVs of the past decade.
Last week, Bill Ford, the eponymous chief executive, announced an ambitious plan to build hybrid vehicles as well as introduce ethanol-burning models. Restructuring the business, he pointed out, will not bring success, because it's not something customers care about: 'The customer wants the latest and greatest technology. The customer wants leadership in technologies that are going to make their lives better.'
