“here in the United States we don’t have problems. We have challenges. And every challenge is an opportunity.”

Jack Ewing:

MUNICH — In 1987, a recent engineering graduate named Norbert Reithofer wrote a treatise that in retrospect reads like a manifesto for the German economy. The only way manufacturers in a high-cost country with few natural resources could survive, he argued, was by becoming the most flexible and efficient in the world.

Mr. Reithofer, now 56 and chief executive of the automaker BMW, has since put that principle to work with a vengeance, delivering consistent profit through two crises and becoming something of an icon of the revival of German industry.

Though continuing to build roughly 60 percent of its vehicles in high-cost Germany, BMW reported another rise in quarterly profits this month despite the worst downturn the European car industry has had in decades.

As the auto crisis shows signs of spreading to the premium market, though, Mr. Reithofer faces a test of his management skills that will have implications for the whole nation. Cars are Germany’s largest export product. But the losses that companies like Fiat, Ford and General Motors have been piling up in the region raise fundamental doubts about the future of automobile manufacturing in Western Europe.