The last recession forced the auto industry to slash costs, shutter factories, tear up contracts and rely on government funding.
Now the what-if question for increasingly bullish investors convinced the worst is behind for the battered sector: What's the industry's playbook for a possible double-dip?
Global auto sales tumbled 13 percent in 2009 to hit a seven-year low in a collapse that forced both General Motors Co and Chrysler into U.S.-government funded bankruptcies.
But since the middle of last year bond and stock investors have bet that stronger suppliers like TRW and survivors like Ford Motor Co have turned the corner.
That bullish consensus hinges in part on the assumption of strengthening auto demand in the second half of 2010 in the U.S. market, now the second largest behind China.
From an auto industry point of view, we are still in a depression, said Jeremy Anwyl, chief executive of auto tracking service Edmunds.com.
Analysts say another downturn could delay or scuttle plans to reduce the reliance of GM and Chrysler on government financing in a blow to the plans of the Obama administration.
It would also imperil Ford's plans to pay down its debt and draw Asian automakers led by Toyota Motor Corp into an even deeper price war through incentives in order to keep inventories from rising, analysts say.
The GM IPO gets put way back on the back burner, said George Magliano of IHS Global Insight, in the event of a return to recession.
The last U.S. recession began in late 2007 and ended in the middle of last year in the view of most economists.
Meanwhile, U.S. auto sales are forecast to recover to around 11.5 million to 11.8 million for 2010, up from an anemic 10.4 million last year, the lowest total in 27 years.
During the first quarter, U.S. auto sales were running just short of 11 million vehicles on an annualized basis.
Another recession in the near-term would delay GM Chief Executive Ed Whitacre's plans to reduce the 72.5 percent U.S. and Canadian government ownership in GM through an IPO.
Whitacre, who was installed to oversee the U.S. government's nearly $50 billion investment in GM, has said the top U.S. automaker could post a profit in 2010 with an IPO possible by the end of the year.
During the last recession, GM cut costs in bankruptcy so it could break even with U.S. auto sales running below 12 million units, sharply down from the 16 million sales rate that held from 1999 to 2007.
But GM, like other major automakers, needs to see a steady trajectory of growth from 2011, analysts say.
If we were to have a second round of recession, it would make the recovery of GM and Chrysler much, much harder, said Jack Nerad, analyst with Kelly Blue Book. Potentially, it could kill or break them up.
Ford is in a stronger position for now. It posted a $2.1 billion first quarter profit and has benefited in part from backlash to the government bailouts of GM and Chrysler.
But Ford also carries a far higher debt load than rivals GM and Chrysler and needs a continued recovery to pay down $31.3 billion in debt, analysts say.
HOW LOW WOULD SALES GO?
Magliano said IHS Global Insight economists lowered their view of a chance of a near-term recession last month to about 15 percent from 25 percent.
But if one were to occur, he said, U.S. auto sales would be nearer 10.7 million vehicles than the 11.8 million IHS now forecasts, he said.
The real hit would come in 2011, just as automakers and their suppliers are counting on the recovery to gain momentum.
IHS Global Insight now forecasts 2011 sales at 13.8 million vehicles, but sees that falling to around 11.3 million if a recession strikes, Magliano said.
Lower sales would end a recovery in production, possibly reversing a recent run of positive financial results for auto suppliers and a long-building rally in their share prices.
Shares for Continental AG, Johnson Controls Inc, American Axle & Manufacturing Holdings Inc, ArvinMeritor Inc, TRW Automotive Holdings Corp and Lear Corp have at least tripled in value since March 2009 when GM declared bankruptcy.
Other pressures from a renewed downturn would come from lower pricing as consumers seek cheaper vehicles and automakers offer deeper incentives, just as Toyota has done in recent months in a bid to bounce back from its safety crisis.
Toyota has had to increase its average discount by about 20 percent in April to near $1,945, according to Autodata.
At the onset of a new recession, Anwyl said, Car companies would double down on incentives as Toyota did. Toyota had to sell cars that were already built, and all of the car companies would have to do the same thing, he said.
(Reporting by Bernie Woodall, editing by Leslie Gevirtz)