Could the USA really be ready to embrace diesel engines for its SUVs, pick-ups, minivans and even passenger cars? The answer is probably "not just yet". But the time is getting closer and closer. An editorial comment in the Detroit News as show week kicked off described diesel as "waiting quietly in the corner." And a slew of small European-sized cars are also coming to the US market. Anthony Lewis and Chris Wright report from Detroit.

That Detroit News editorial suggests that converting to diesel would be far less expensive than developing alternative fuel technologies. Legislation to speed up the introduction of diesel is currently going nowhere, blocked by environmentalists. But, argues the Detroit News, "if diesel is good enough for Europe, it ought to be good enough for the United States."

And, indeed, a walk around the show floor revealed sensible people talking about the need for greater economy, more sensibly-sized cars and, well, just the need to be sensible. Yet VW remains the only carmaker to sell diesel-powered cars in the USA, and showed two new diesel models, the Passat and V10 Toureg, hardly small, but at least a diesel.

This meant that for the first time in years at this annual homage to 20-inch wheels and mighty V8s, small was beautiful.

Why? "There are a certain number of people who have re-fallen in love with the small car," according to Jim Farley, vice president of Toyota's youth-oriented Scion brand. And he should know. In less than seven months since launch with just two small models, Scion has sold more than 11,000 cars. Target is 100,000 a year.

Mini mania
Blame it on the Mini. BMW's British-built icon is highly popular in the States with sales topping 36,000 last year. The Mini convertible, which the UK gets this summer, arrives here in the autumn and is predicted to spark another wave of Mini mania.

"Mini has proved small cars can be successful and the smaller a car is the more you can overstate it or caricature it," said Moray Callum, Mazda design chief.

Mazda unveiled the MX-Micro Sport, a concept based on the Mazda2, and a car due to go on sale in Japan later this year. It was at the show to test reaction in the States to small cars. "There's a lot of discussion about small cars in the USA so we're going to gather reaction to it here," said Callum.

DC's smart launches in 2006, with Dodge going to Europe
Just as well there is that interest, because Smart, DaimlerChrylser's small city car division, aims to start selling State-side from 2006, the same time that Dodge, which also belongs to DaimlerChrysler, makes the journey across the Atlantic to start selling in Europe alongside Chryslers and Jeeps.

And what did Dodge do, apart from the unveiling the ME-Four Twelve, a 850bhp supercar? It unveiled the very small Slingshot sports car, which is expected to make it into production sitting alongside the Smart roadster in the DaimlerChrysler portfolio, from 2006.

The Slingshot is powered by a three-cylinder petrol engine delivering 100bhp and around 45mpg, said Brit Trevor Creed, Chrysler Group design chief.

A portfolio of new international Dodge passenger cars will be launched from 2006, said Dieter Zetsche, Chrysler Group president. And over the next four years, the number of Chrysler Group right-hand drive and diesel-engined models is expected to double.

Even Ford was at it, unveiling a small concept SUV, the Bronco, powered by a 2.0-litre engine, which, of course, is small by US standards.

GM sees Fiat small car synergies
As was General Motors with its new rear-wheel drive, and small, Kappa platform set to spawn at least three new models. First, in 2005 as a '06 model year car, will be the Pontiac Solstice with the Chevrolet Nomad and Saturn Curve to follow. All were unveiled at the show and despite their very European sizing, each received glowing reports from the local media.

The fact that the price of gasoline rose by up to 20cents a gallon to $1.65 as the show opened (still ludicrously cheap by European standards) might have helped focus the mind on fuel efficiency, of course. That, and the decision by Japanese carmakers to use the NAIAS to up the stakes on hybrids.

Honda, Toyota and Subaru announced plans to expand their hybrid ranges, while Lexus was taking double-page ads in the press announcing its forthcoming hybrid, the RX400H which arrives later this year. These are all gasoline engine-electric motor hybrids.

For Honda, building on the relative success of the Civic hybrid, it's a jump up to the Accord which the company claims will have more power than the 240bhp gasoline version. It will also use cylinder de-activation to cut up to three of the six cylinders when cruising. Honda currently sells about 20,000 Civic hybrids a year out of total Civic sales of around 350,000. The company expects the same proportion with Accord which last year had sales approaching 400,000.

Toyota will have its Highlander SUV hybrid on sale by this time next year and is reported to be considering a hybrid system for its full-size pickup, unveiled here as the FTX concept, and due in production in 2006.

Ford will be first with an SUV hybrid when the Escape goes on sale this summer. Ford was using the vehicle as a free shuttle for journalists during the press preview days. GM, spearheading much of the fuel-cell technology, is still two years away from its first hybrid. This will be a mild hybrid version of the Saturn VUE, a compact SUV, due in 2006.

A full hybrid - with electric motor big enough to power the vehicle on its own - won't come until 2007 with the Chevrolet Silverado pick-up and GMC Yukon.

It was just the Japanese who raised the stakes. Mercedes-Benz unveiled the Vision Grand Sports Tourer with a V8 diesel-hybrid developing 314bhp. Revealing the car, Mercedes boss Jurgen Hubbert said that diesel engines "are vastly underestimated in the United States." Perhaps the understatement of the show.

One of the problems is, of course, the price. In an incentive-driven market where gasoline is still cheap, buyers want the best deals.

"People make buying decisions based on their monthly payments," said Jim Padilla, executive vice president of Ford North America. "Will they pay an extra $3,000 for a hybrid? The cost of hybrids has to come down."

Which, of course, was the other big talking point. Incentives, ranging from zero per cent finance to hefty cash rebates. That at least has been the approach of the US carmakers while the Japanese have taken a different route, loading cars with extras while keeping prices steady.

The latter approach seems to have been the better one. According to Edmunds.com, rebates, discounts or special financing by the Big Three averaged $3,445 a car last October compared with an average of $931 offered by the Japanese brands.

At the same time, the Big Three lost market share, down 1.7 per cent to 60.1 per cent in the first ten months of 2003 while the share of the Japanese brands grew 1.4 per cent to 29 per cent.

Perhaps more worryingly, GM was making a profit of just $184 a car during that time, down from $555 a car in 2002.

You don't need a calculator to work out the maths on that one. The only way to sell more cars, and sell them profitably, is to make cars that people want to buy.

And if the trend really is for smaller cars, then the Big Three will have a long slog ahead. Peter Horbury, the British designer who helped transform the image of Volvo so successfully, moved to Michigan on January 1 to head up Ford's Lincoln and Mercury design team.

Looking at the cars on the stand, you weren't quite sure whether he was going to laugh or cry. Lincoln and Mercury averaged rebates of $3,000 a car last year. Horbury's job could be just about the toughest in the industry at the moment.