Nowhere outside Iraq was the fall of Baghdad cheered more wildly than in Dearborn, Michigan, home to the largest population of Iraqi exiles in the US.
But down the road, at the three largest carmakers - General Motors, Ford and Chrysler, part of Germany's DaimlerChrysler - joy soon turned to gloom.
It's becoming clear the hoped-for post-war consumer boom was overhyped, and makers are abandoning profit targets and stepping up cost-cutting. This week, GM warned its $2.5 billion full-year earnings were in doubt because of US economic conditions, and global.
Ford is more positive, believing it can still hit its 70 cents a share goal thanks to increased cost-cutting and a better-than-expected first quarter. But even Allan Gilmour, the upbeat finance director, accepts that hopes of maintaining or increasing prices are fading. "Incentive activity is increasing, putting pressure on our net pricing assumption," he says.
Chrysler has made clear it's unlikely to reach its $2 billion full-year operating profit target, although chief executive Dieter Zetsche says the company would "continue to strive for that objective".
"Terrible things" are happening in the US market, Zetsche said in London last week. "Our very ambitious revenue targets have proved pipe dreams. We still hope we can reach our cost targets."
In Europe the market has been struggling with weak growth for years, and the German slide towards recession. The big German makers - VW, DaimlerChrysler and BMW - are also big exporters to the US, making profits dependent on north American sales.
Chrysler, GM and Ford have all accelerated already aggressive cost-cutting plans, while European carmakers have their own plans. This has led to cutbacks in marketing, re-engineering of parts, less expensive hotel rooms for executives and even in Ford's private jets. "The sense of urgency has increased because the market headwind has become more intense," says Niel Golightly, head of communications at Ford of Europe. "I suspect every automotive HQ is sending the signal - no slackening on cost reduction."
Almost every indicator is flashing amber or stuck on red. Stocks of unsold cars in dealers' lots are far above optimum levels and 20 per cent above last year, meaning production cuts. Falling new car prices have led second-hand values to fall at their fastest rate on record, which hits the profitable finance arms.
Japanese rivals are attacking the highly profitable pick-up truck and SUV markets. And few of the new models Detroit is banking will have an impact this year.
On the traditional measure of unit sales, the industry appears healthy. Sales in the first three months of the year reached an annualised 16.3m, compared with the full year last year of 16.8m. If the industry reaches GM's forecasts of the low to mid 16m unit sales, 2003 will be the fourth best year on record, after three record years.
The problem with sales as a measure is the raging price war. John Devine, GM finance director, says that net prices of its cars and trucks fell 3.2 per cent in the US in the past year as consumers were given better special offers than ever before. This month, the company introduced 5-year interest-free loans, sparking expectations prices would fall further.
The decision to cut prices to maintain sales in the face of lower demand makes some sense. In an industry with a high fixed-cost base, profitability relies on keeping expensive factories as busy as possible. Black holes in the pension funds of GM and Ford - $19 billion at GM alone - make generating cash a priority.
But, as consumers grow to expect special offers, their impact is being reduced. Combine this with the falling second-hand values, which in turn reduce the amount customers can raise by selling their old vehicle - so requiring another round of price cuts on new cars - and the price war looks more like a death spiral.
- Financial Times