Falling market share: Rick Wagoner (right), chairman and CEO of General Motors, and Larry Burns, vice-president of R&D and planning, with a concept car at the Detroit motor show last year.

THE deepening financial troubles of General Motors Corp and Ford Motor Co will likely overshadow the shimmering new car and truck models on display at the Detroit motor show next week, one of the industry’s most important annual events.

The North American International Auto Show, which opens tomorrow, comes as the two US motor manufacturers — facing cutthroat competition, high labour-related costs, shrinking market share and excess capacity — are preparing to report their fourth-quarter and full-year financial results.

Analysts expect GM, which has lost nearly $US4 billion ($A5.3 billion) through the first three quarters of 2005, to post its fifth straight quarterly loss later this month. Cross-town rival Ford is expected to eke out a small profit, but announce major plant shutdowns and blue-collar layoffs.

“The next 12 months will not only determine the very future of the domestic automobile industry as we know it, but Detroit will become the lightning rod for the most pressing issues facing this country — health-care costs, pension reform, global competition and its threat to the industrial foundation of America,” said Peter DeLorenzo, motor industry analyst and publisher of Autoextremist.com.

The mood will be sombre at Ford’s stand, with Mark Fields, the head of Ford’s Americas division, and other top executives avoiding questions on the details of its long-awaited restructuring plan for North America during the show.

Ford chairman and chief executive Bill Ford jnr has said the turnaround plan, expected to be revealed on January 23, would include “significant plant closings” and job losses.

Industry executives warned this week that higher interest rates and continuing volatility in energy prices could crimp US motor industry demand this year. GM and Ford both lost US share to foreign rivals led by Japan’s Toyota Motor Corp.

Asian brands won a 36.5 per cent share of the US market last year, a 1.9 percentage point increase compared with the same period in 2004.

US manufacturers, on the other hand, collectively lost 1.7 points of share at 57 per cent, according to industry tracking firm Autodata.

With Asian car makers ramping up output amid a flat to lower US sales outlook, more share erosion seemed inevitable for GM and Ford, analysts said.

KPMG released a survey this week that showed most motor industry executives believed US manufacturers’ share of the global market would decline in the next five years.

GM is now looking at the possibility of losing its “world’s largest automaker” crown for the first time in more than 70 years to Toyota, which unseated Ford for the No. 2 spot in 2003. Also, Toyota appears poised to overtake DaimlerChrysler’s Chrysler in the US this year after gaining 1.1 points of market share in 2005.

Toyota said it planned to make a record 9.06 million cars worldwide this year, just shy of the 9.15 million cars and trucks that some analysts expect GM to build next year.

Toyota’s production increase of 10 per cent comes at a time when GM is shrinking capacity by slashing 30,000 jobs and closing 12 facilities in North America.

One bright spot for GM is the launch of the GMT-900 series, a new line of redesigned sport utility SUVs and trucks.

“With the upcoming introduction of new vehicles based on the GMT-900 platform, GM should regain lost share in the remarkably profitable large truck and large SUV segments,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.

But Argus Research analyst Kevin Tynan was sceptical, given that high fuel prices prompted many consumers to turn away from mid-size and large SUVs, and buy more fuel-efficient cars in 2005.

“This year is really a year where Ford and GM don’t have the products to satisfy the demand in the market if the shift away from trucks continues,” he said.

The increasingly volatile and difficult environment in Detroit as labour and management tensions come to a head could also grab the media spotlight at this year’s show.