Restructuring and job cuts are shattering assumptions about why it's all happening amid still-strong sales and quarterly profits. Two words may help navigate the confusion: “peak auto.”

After long runs of expanding sales and growing profit, Detroit’s automakers are making tough calls while they still have the capital and the breathing room to do it. The upshot: nearly a decade of good times is morphing into a more challenging period that will give industry leaders a chance to prove just how good they are — or not.

Economic growth, comparatively cheap consumer credit and profit margins “achieved, and largely sustained, historically high levels on the back of what looks to be the greatest cyclical auto demand rally on record,” Morgan Stanley said in a note Thursday. “In our opinion, the low valuation multiples embedded in auto share prices is just the market’s way of saying: ’Hey… it’s been a nice run. It can’t last. And it’s OK.’”

Average transaction prices on new vehicles hit an all-time high for January at $32,274, Morgan Stanley calculates. Dealer inventories also hit an all-time high in January, "up 35 percent from January 2009 (and up 97 percent from January 2010 levels)." And multiplying the units times the average prices implies an inventory "value" of $136 billion, "up 129 percent" from January 2010.

Can that be sustained, especially if credit becomes more costly? Fair question, but it needs to reckon with the unmistakable trend toward higher-revenue and higher-profit trucks and SUVs. Selling more in each segment could bolster financial results even if total unit sales slip.

In Old Detroit, that would portend disaster because Old Detroit leadership would be dithering as the 10-year-old party still rages. In New Detroit, leadership appears more sensitive to conditions because it's determined to avoid the denial that tipped two of three of them into ignominious bankruptcy.

The market’s rotation away from traditional, less-profitable car segments, discernible to more discerning types like legendary Fiat Chrysler Automobile NV CEO Sergio Marchionne and team, is exacting profound change on this town’s automakers. And that's a good thing, however painful the transition is for some.

The alternative is worse. It’s one reason why General Motors Co. is moving to close assembly plants in Detroit, Lordstown and Oshawa, Ontario; why Ford Motor Co. is restructuring its global product development processes and lineups; why FCA is planning to invest $4.5 billion in southeast Michigan and create 6,500 jobs to grow its Jeep and Ram brands.

Maximize strengths, like FCA is doing with plans to boost truck and SUV production by expanding their lineups. Cut losses, like GM did in unloading its Opel and Vauxhall brands in Europe and moving to cut excess plant capacity in North America. Identify partners, as Ford did with Volkswagen AG, Mahindra Group of India and Pittsburgh-based Argo AI, its autonomous-vehicle unit.

The common denominator is a race to seize whatever growth opportunities exist. Foreign markets from Europe to China and South America are proving challenging and costly, exacerbated by trade tensions courtesy of President Donald Trump. And new Silicon Valley rivals are opening an all-new competitive front that demands innovation and speed.

It's all so potentially confusing to folks accustomed to seeing the business as one zero-sum game that cycles up and down — because that's the way it's always been. But it's not that way anymore. The array of competition has widened; patience for mediocre margins is evaporating; and premiums for decisiveness are rising.

This town and its defining industry have never been here before. Investing smartly today for competitive advantage three or five years from now has never been more important, or more complicated.

The financial gearing of the traditional car and, especially, truck business is expected to fund bets in the Auto 2.0 spaces of mobility, autonomy and electrification spaces also occupied by high-tech competitors. Hewing to old business models — i.e., old plants assembling vehicles fewer people want — is a recipe for going out of business.

Denying that reality is a risk not worth taking.

Daniel.Howes@detroitnews.com

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.