Big profits could be silver lining of recession

Could the upside of the downturn be years of sustainable profits?

That was one idea floated at the IHS Global Insight automotive conference held in Tokyo this week. The glass-half-full outlook goes like this:

Through Herculean belt-tightening, automakers in the United States have slashed capacity, trimmed their workforces and overhauled their product lineups to eke out profits in today's pathetically atrophied market, where volume wallows around 11 million units a year.

But just wait until demand recovers to pre-recession levels. When that happens, these carmakers will be lean, mean, profit-making machines -- ready to rake in the windfalls.

"Look at what Ford has done, what GM has done, what some of the bigger suppliers have done," George Magliano, IHS Global Insight's director for North American forecasting told the crowd. "If we can make money at 10 and 11 million units, we're certainly going to make a lot more money at 17 million units."

Of course, no one knows when the market will recover -- or to what level. But the biggest wild card will be whether the automakers can maintain their fiscal discipline in a time of plenty.