For analyst Kevin Tynan of Argus Research, the Detroit auto show is an annual love-in, usually followed by a hangover.

"As a car guy, you love it," says Argus. "There are shiny cars everywhere. But from the perspective of being an analyst and looking at what's in store for 2006, nothing I saw there changes my outlook for 2006. It's going to be a more difficult year than 2005.

"If the proof is in the numbers, year after year we come out of the show with optimism, and by midyear we're scrambling for answers."

Last year will go down in history as one of the worst for General Motors and Ford Motor Co. Their stocks and credit ratings took a pounding.

This auto show was their big chance to prove they've got the gee-whiz products that might restore faith in brands tarnished by the relentless discounting of the last year.

But nothing analysts saw in Detroit has changed their opinions.

Morgan Stanley analyst Jonathan Steinmetz said in a research note: "A tour around the auto show convinces us that market share stability is going to be difficult for GM and Ford to achieve."

Unimpressed
Brett Hoselton, analyst for KeyBanc Capital Markets, saw the Detroit show as a somber affair from an investor point of view.

"I continue to be unimpressed with what Ford is doing," said Hoselton. "When I walk through their displays and see some of their crossovers, their product seems kind of like a knockoff. The Ford Edge looks like a cross between a Nissan Murano and a Lexus RX 330.

"They look at everybody else and see what is selling and say, 'We'll design something that looks like that,'" said Hoselton.

"Their product development is woeful. They're playing it safe, and they can't afford to do that."

Steinmetz also took a dim view of Ford's prospects: "While we liked Ford's new products, we walked away from the show marginally more negative on Ford, given the number of competitors targeting what we believe are Ford's most profitable vehicles."

GM's announcement at the show that it would slash prices an average of about $1,300 a car on a wide swath of products caught the ear of David Healy of Burnham Securities in New York.

"Their previous pricing strategy consisted of grossly inflated sticker prices offset by grossly inflated incentives," he said. "It didn't say much for the company's view of the intelligence of the average car buyer.

"Getting sticker prices close to transaction prices is a good thing. But it's going to be tough to pull off. Detroit, and especially GM, has trained car buyers to expect big incentives."


Small-car shift
One of the show's biggest trends was the shift to smaller cars, driven by soaring gasoline prices.

"General Motors specifically and Ford, to a smaller degree, are not ready for the shift to smaller vehicles," said Tynan of Argus Research.

Indeed, beneath the glitz of the show, the outlook remains glum.

Morgan Stanley's Steinmetz wrote: "Following an extensive tour of the … show in Detroit and presentations by several OEMs and suppliers, we are retaining our cautious view on the industry."

Hoselton also was feeling flat on the show floor: "In terms of the stocks and so forth, clearly the earnings guidance provided over the last couple of days was not that good. The general tone is somewhat somber. The recognition is that 2006 is not going to be a whole lot different than 2005."