AUBURN HILLS, Mich. — There's little question this is a company town.

The 14-story Chrysler world headquarters is the tallest building for miles, towering over a 486-acre corporate campus on the western edge of the city. Police cruise in Dodge Chargers developed with the automaker. The city manager drives one too, and his wife gets around in a Dodge minivan. City Hall is a converted country estate built by John Dodge's daughter.

At night, fewer than 20,000 people go to bed here, but during the day, when Chrysler is at work, the population soars to nearly 60,000.

In fall 2008, when Chrysler was rumored to be in merger talks with General Motors, panicked city officials issued a press release to calm public nerves. With good reason: When Chrysler shuts down, so do local businesses. Nearly all their customers work at the automaker.

In January, Chrysler was on mandatory furlough as it tried to cut costs and production after receiving $4 billion in emergency government loans.

"Yeah, we're pretty dependent on that one company," said Tom Alter, an executive at a local credit union. "But look around. I think it's inevitable that Chrysler is going to play a much smaller role around here. We've got to get out of the auto business."

Auburn Hills, like most towns in Michigan's Oakland County, was built on cars. Housing the offices and factories of automakers and the myriad suppliers who make components for them, this region grew rich off the assembly lines of Henry Ford, Alfred Sloan and Walter P. Chrysler.

Even today, the county is the nation's fourth wealthiest, home to some of the nation's toniest suburbs and towns like Bloomfield Hills, where auto executives in palatial mansions have driven the median household income to nearly $200,000 a year.

The top employer in the county is General Motors; Chrysler is number three. In Auburn Hills, seven of the top 10 employers are in the automotive industry. Chrysler leads the way with more than 10,000 workers at its headquarters. The company contributes one in every seven property-tax dollars the city collects, about $4 million annually.

But with the auto industry in deep trouble, unemployment is rising rapidly and property values are crashing.

In 2008, for the first time in memory, tax collections declined here, said Auburn Hills City Manager Peter Auger. That's in big part due to reassessments of the Chrysler headquarters (requested by the carmaker) that have lowered its value by $160 million in the last two years.

The city's $66 million budget this year is down 18 percent, and Auger has ceased filling empty jobs. A recent report suggested that if Chrysler were to go out of business, the office space vacancy rate here would shoot overnight to 62 percent from 3 percent.

It's a familiar story, played out in the slow death of steel-mill towns, logging towns and shipbuilding towns across the nation. But local officials believe that Auburn Hills is different, that it can somehow reinvent itself.

"I'd like to position ourselves to help lead Michigan out of the recession," Auger said. "We can survive this."

The key, officials say, is to wean itself from the automobile by luring new types of business to this suburb, a half-hour's drive north of Detroit and perhaps best known as home to the Detroit Pistons basketball arena. Trumpeting incentive packages, skills retraining programs, business incubators and the fact that it has no municipal corporate or income tax, Auburn Hills wants to bring in financial services, healthcare and high-tech companies to foster startups and encourage expansion of educational institutions.

"Since the second world war, we've been pretty comfortable having all our eggs in just one basket," said L. Brooks Patterson, Oakland County's longtime executive, holding up a list of 10 new industries to focus on for growth. "We've got to diversify."

In 2010, Auburn Hills will take a big step in that direction when Oakland University and Beaumont Hospital open a medical school in town. It's a project that will cost $100 million over 10 years, but when it's finished, it will bring about $1 billion to the local economy every year.

The goal is to make Auburn Hills and the surrounding area a destination for top-tier medical care in the mold of Minnesota's Mayo Clinic or the Cleveland Clinic. Patterson calls the project a "medical main street" and says it could create 45,000 jobs countywide in the next decade.

Auburn Hills' business-friendly policies already have lured companies like Digital Dialogue, a call center that hired 120 people last year and expects to hire 200 more in 2009, and Lowe's, which will open a store that is expected to create 175 jobs.

Projects like this can't come soon enough for the people who live and work in Auburn Hills.

Dawn Hammock, 38, works at the Country Kitchen, a half-century-old diner.

Three years ago, she moved to the area from her native Florida with her family and found work as a waitress in the center of Auburn Hills. With the car industry on better footing, she was happy, she said, earning decent money while her husband worked as a machinist.

But with Chrysler on the ropes, business in town fell off sharply. Hammock left her first job to work at the Country Kitchen on the edge of town. She figured she'd do better here because it's favored by truckers rather than Chrysler workers.

But everything is slow. Tips are off 25 percent and a month ago her husband got laid off.

"It's depressing, nerve-wracking and stressful," she said. "I don't really know what to do."

In April, Volkswagen closed its U.S. headquarters in Auburn Hills, moving 1,500 jobs to Virginia. But some could not make the move. They joined thousands laid off from Chrysler and other companies. Many can't leave because property values have plummeted so far they're unable to sell their homes.

"Obviously, anyone who works in the auto industry is scared for their future," said Kent Snyder, a local financial planner and former treasurer of Auburn Hills Chamber of Commerce. "But even the guy working in retail is worried because when the auto companies are in trouble, it trickles down."

The city is now working on a downtown revitalization program to lure retailers and restaurants to the main street district.

A deal announced this week to give Italian carmaker Fiat a 35 percent stake in the company provided a ray of hope for Chrysler, yet industry analysts still predict its demise, pointing to the fact that its sales fell 30 percent in 2008.

Last fall, Auger joined other Michigan officials in asking for up to $100 million in federal aid for cities that lose major auto industry facilities. Some experts have told him that the Chrysler campus could be converted into a giant shopping mall.

Still, Auger can't concede that the end is near.

"There are people who want Chrysler to fail," Auger said. "But I still want them to succeed."