STATE OF THE INDUSTRY

The global auto industry hardly can be blamed if it looks back on 2005 as a shift in paradigm.

For Western Europe, the year has been one of diluted profits resulting from an increasingly hostile market plagued by labor unrest, stagnating populations and volatile currency exchange rates. Add to that mounting material costs, an Asian car invasion and a continuing OEM migration to low-wage Eastern Europe.

Beleaguered Fiat Auto SpA is climbing up rung by rung through joint ventures with Ford of Europe and others, after nearly disappearing under disorganization, overwhelming debt and a divorce from General Motors Corp.

DaimlerChrysler AG remains expectant — waiting to exhale under the new leadership of Dieter Zetsche. And Volkswagen AG is drawing a line in the sand, facing down the powerful IG Metall union as it seeks wage concessions.

Negotiations to lower automotive trade barriers occupy the 10-country Association of Southeast Asian Nations, marked by a flurry of talks with the U.S. and Japan, which see ASEAN as a counter strategy to the looming threat of China and India.

Australian auto makers continue to roll out new versions of their best-selling models in what promises to be a benchmark sales year, as suppliers reel from the dwindling percentage of local parts. Law makers are rushing to convince the regional Big Four OEMs not to abandon local component makers for low-cost Asia.

Meanwhile, India's star continues to rise toward its goal of becoming the small-car export hub of Asia. The lumbering giant slowly is stepping out from behind China's shadow with an educated workforce, a large middle class and a well-planned drive to take its place on the world stage.