America's carmakers face up to a very difficult future

Amid concern that the US is falling into recession, Detroit for once is taking the lead - it's already there

Amid concern that the US is falling into recession, Detroit for once is taking the lead - it's already there. Michigan suffers from the worst unemployment rate in the US, and has taken a serious economic beating as the US car giants - all of whom call Detroit, the State's largest city, home - face the cold reality of global competition, with torrid financial figures and falling sales.

Thankfully for Motor City there is some hope, albeit limited. Economists regularly refer to revolutions and innovations coming when the old systems and hierarchies are at their weakest. The financial straits of the US firms coincide with rising oil prices that are forcing the industry as a whole to look for long-term alternatives to fossil fuels. It's time for a change and certainly General Motors and Ford seem ready to ring them in rather than resist them.

GM, parent company of Opel, Saab and Chevrolet to name but three of its brands, is celebrating its centenary later this year and its senior management makes clear that the firm plans to be around for the next 100 years. To do that they will have to ensure the firm is at the forefront of the new technology developments.

For a start, they are working to improve the fuel consumption of their fleet. Next they are seriously pursuing the biofuel programme, with chief executive Rick Wagoner announcing a partnership this week with Coskata, an ethanol firm that plans to produce up to 100 million gallons of the biofuel per year by 2011. Coskata has also attracted investment from venture capital operations in Silicon Valley.

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Then there are the hybrid formats, where the Japanese firms have long held the lead. When Toyota and Honda started selling petrol-electric models, the Americans sneered. So did many of the European brands. Since then they've rapidly changed their views.

Surveys in the US show that where Toyota is seen as part of the solution to global warming, the US car giants are considered part of the problem. Such poor public opinion could be terminal for a car company.

The Detroit Motor Show was filled with promises of great new advances in fuel-saving technology, but there are clear signs that no one is quite sure which short or medium-term strategy to take. GM is opting for ethanol; Ford is hoping a new set of efficient turbocharged engines - Ecoboost - will deliver the fuel economy buyers are supposedly seeking. The Japanese are determined to turn out petrol-electric hybrid models as the medium-term answer to our energy ills, while the German brands are uniting in a diesel alliance to get Americans to follow Europe's lead.

As Mercedes expanded its diesel line-up in the US, BMW announced it was offering diesel versions of its 3-Series and X5 models, while Audi used the show to reveal a diesel concept version of its R8 supercar, powered by a 6-litre V12 493bhp engine. The car is very likely to make it into production, becoming the first diesel supercar on the market. Perhaps the most interesting car at this year's show, however, was not from one of the mainstream brands, but from a new niche car firm set up in California. Fisker introduced its Karma hybrid plug-in concept car at the show this week with promises to put it on the market by autumn next year.

That would beat the likes of GM, which has targeted 2010 for its launch, a date that is by no means cast in stone. Promises are cheap in the car industry, but Fisker has some serious financial supporters from Silicon Valley that suggest it is more than a pipe dream. With Toyota promising trials of its plug-in hybrids by 2010, the Californian firm could get a jump on all the big brands if they pull it off.

For all the new technologies on offer, however, it's the US customers who will decide which energy path the car firms will pursue in this car-crazy market. For now they still seem wedded to big bodies and power. One of the loudest cheers that went up at a launch during the show was for the new Ford F-150 pick-up truck.

Ford's F-Series trucks have been the most popular vehicles on the US market for the past 26 years. Despite the Prius sales and talk of smaller cars saving the planet, Americans still love their great big pick-ups, powered by 4-litre petrol engines or more.