By David Schepp BBC News Online North America business reporter

As Detroit prepares to host the annual North American International Auto Show, the future of the US' 'Big Three' auto makers seems as bleak as the Motor City's winter skyline.

The increased incentives are kind of losing their effect David Healey, Burnham Securities

Forty-five auto makers from around the globe are set to unveil their latest models at Detroit's Cobo convention centre, annual home to the automotive industry's most glamorous get-together.

But concern over the US' weak economy is likely to hang over the event.

In addition, rising oil prices, a looming war in Iraq and declining market share have General Motors, Ford Motor and DaimlerChrysler's Chrysler Group scrambling harder than ever to sell cars and trucks.

Wheelin' and dealin'

The Big Three have been relying heavily on generous incentives to sell cars, including interest-free financing and substantial rebates.

Some analysts warn domestic manufacturers have become addicted to such consumer friendly tactics, with no sign of a return to full-price sales.

On Friday, GM, the world's largest auto maker, said it was renewing its interest-free-financing programme for loans up to five years on the bulk of its car line-up.

As an alternative to zero-percent interest, GM said it was offering cash rebates of up to $3,000 on many models.

KPMG'S KEY FINDINGS

Internet's role less than previously envisioned Profitability won't return to 2004 Challenging environment that includes over-capacity and slimmer profits Less focus on mergers and acquisitions Auto makers continue to turn a deaf ear to customers Consumers are less loyal Big global changes underway, including a shift toward Asia

But the Big Three's efforts to unload Detroit metal may backfire, according to some experts.

"The increased incentives are kind of losing their effect," says David Healey, automotive analyst for Burnham Securities.

"They've sold an awful lot of cars in the last two and three years," he says. And consumers have become so accustomed to the deals, they are not chomping at the bit as they once were.

Downside

On the positive side, Mr Healey told BBC News Online, the long-term outlook for the domestic auto industry is positive.

Rising incomes and static auto prices have allowed Americans to afford larger, more feature-laden cars than they previously owned.

While official statistics have yet to be released, industry executives believe about 17 million vehicles were sold in the US last year, beating 2001 and matching 2000's levels.

Despite the heady sales tallies, other analysts are not as sanguine over the industry's future.

Asian auto makers have moved beyond economical, well-built saloons and are now posing a serious threat to Detroit's last profitable domain - sports-utility vehicles (SUVs).

This will ensure cut-throat competition among the world's manufacturers, they point out.

Downbeat

The global car industry's capacity to produce far more vehicles than there are buyers poses yet another serious threat to Detroit's Big Three, says David Cole, an analyst at the Centre for Automotive Research, in nearby Ann Arbor, Michigan.

"It has continued to drive the industry to a point where it's not sufficiently profitable to justify continued investment," says Mr Cole.

Most industry executives believe overcapacity will continue to grip manufacturers for the next five years, according to a study compiled by consulting-firm KPMG.

That is perhaps one reason why 30% of the 100 auto executives polled by KPMG said they expected lean times within the industry until 2005.

Global overcapacity is but one more big issue with which Detroit continues to grapple.

Slimmer profits and declining customer loyalty - at least among domestic brands - may continue to drive industry instability for some time, the report noted.