General Motors Corp. (NYSE: GM) lost its crown as the world's largest automaker to Toyota Motor Corp. (NYSE: TM) after 77 years. This is hardly a surprise.

As Bloomberg News notes, "GM's 2008 sales fell more than 11 percent to 8.35 million vehicles, according to a company statement today. Toyota posted a 4 percent drop to 8.92 million."

It's not worth crying about 600,000 or so vehicles. The U.S. auto industry has much bigger problems. Consumer spending is still moribund. Credit markets are still frozen so much that otherwise qualified buyers are having difficulty getting their purchases financed.

GM, for its part, continues to hang on by its fingernails. Last month, it received $4 billion in funding from the TARP which is supposed to hold the automaker over through March. It will need tens of billions more. Pimco has quit a bondholders committee set up to negotiate a debt-for-equity deal for GMAC, according to Bloomberg.

Fiat probably hoped to get a 35% share of Chrysler without putting any skin in the game. Why would the Italian auto company expect that? May it is just naive. The US government is unlikely to let a foreign company get a piece of a US company for free, especially if the Treasury is writing the checks to keep the American company afloat.

According to The Wall Street Journal, "Chrysler LLC has found an international partner in Fiat SpA but the auto maker isn't out of the woods, mainly because the deal is contingent on Chrysler getting $3 billion in additional government loans."

Why should Fiat walk in and get a piece of a firm that could be turned around using taxpayer cash? The answer is that it shouldn't. The Treasury should insist that Fiat put at least as much money into Chrysler as it is.

Fiat is really not giving Chrysler much for its 35% in the US car company. It will help retool some plants and use them to build small cars that both companies will sell. Whether that helps Chrysler won't be known for some time. In essence Fiat is getting its stake almost for free.

Treasury may want to tell Fiat that bailout money is in short supply especially with the economy getting worse. Fiat ought to pay its own way if it wants to get a piece of the American car market.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Well yesterday's operative word was "might" as in the congress might pass a bill to support the auto industry and prevent the potential bankruptcy of General Motors (NYSE: GM), Ford (NYSE: F) and privately held Chrysler. Things have changed and for now might has become won't -- as in nothing doing!

Republicans in the Senate clashed with the UAW, Democrats and the White House over a thinly viable plan to provide a $14 billion aid package to forestall industry collapse and give all sides the opportunity to improve a bad situation in the first quarter of 2009 under certain conditions.

The breaking point was the UAW's refusal to agree to immediate wage cuts. While headlines pronounce the deal dead, I say let's wait and see. After all this is Washington, DC, where any reasonable facsimile of the truth has a high probability of being posturing and pretending.

I have been following this saga all week and three days ago I posted Auto industry bailout: A bloated government to lead a bloated industry, when I did not see an easy solution for such institutionalized problems - on all sides. This was followed by Auto industry bailout: Oil companies should take over!, a very provocative suggestion that brought a multitude of comments from our readers, taking the bait. In a more congenial mood I continued with Auto industry bailout: Can't we all just get along? yesterday hopeful some good might come out of intense negotiations in the Capital. Intense yes, successful no, or at least not yet.

Well, after months of discussions, pleading, begging, negotiating, posturing, threatening, demanding, embarrassing, strong-arming and finally voting, it looks like the Congress might approve a $14 billion auto industry support fund.

I say "might" because the Republican side of the aisle is not yet on board, so there is still more wrangling to be done.

The term bailout that I and others have grown so accustomed to using is not actually a very accurate term. No one is getting bailed out, and nothing as of yet has actually been solved.

Two days ago when I posted Auto industry bailout: A bloated government to lead a bloated industry, I was thinking that this is one big mess and there was not a clear path to solving the institutionalized problems on all sides.

Here comes a really bad idea -- creating a government oversight board for the automobile industry as a condition of receiving aid. Why is this bad? Because government officials who are trying to stay in power have very different incentives than business executives who should be trying to maximize shareholder value. The problem here is that the CEOs running the automobile industry have been able to keep their jobs despite destroying shareholder value.

Let's look at what Washington is proposing to do. The idea is to create an oversight board (OB) made up of five cabinet secretaries -- Commerce, Energy, Labor, Transportation, and Treasury -- and the head of the EPA and led by an independent chairman -- dubbed the car czar. The OB would direct the drastic reorganization of the automobile industry required as a condition of getting government money.

This proposal is troubling because it's not clear to me that the OB will be able to make decisions about corporate strategy as well as a team of outstanding business executives would. None of the incoming secretaries have experience managing an automobile company so they would have to depend on the car czar for such expertise. And if the car czar came from the automobile industry, he or she would likely be biased towards a former employer.

Lost in this weekend's news about the $700 billion bailout package for the banking industry was a $25 billion loan package for United States auto manufacturers. This package comes at a time when apparently Congress and the President believe that the American people will see $25 billion as a pittance compared to the $700 billion they're already planning to spend on mortgages. While there certainly is precedence for this move --- the government loaned $675 million to Chrysler in 1980--- this loan package is several orders of magnitude larger.

Ryan Pfenninger of MarketRiders is outraged at this loan package, claiming it is anti-competitive to startup companies like Tesla Motors who are investing their own money in alternative technologies like battery power. $25 billion is a lot of money. Detroit should not be able to argue for 30 years against improved fuel mileage and better technology, and then come back to the same government they persuaded into facilitating their failure, for a bailout.

He points out the immense irony in this loan to auto manufacturers. According to Ryan, General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler are currently struggling significantly against Japanese and other foreign manufacturers who have spent the last many years improving fuel efficiency and developing hybrid and other alternative technologies. If Detroit had spent as much time, money, and effort in research and development as they did lobbying Congress to keep fuel mileage standards low, and made competitive non-gas guzzling vehicles, I would venture a guess these loans wouldn't be necessary.

Ryan believes that most people understand a mortgage bailout was necessary. But he's not so sure that if Detroit fails, this could cripple the United States economy. There are plenty of foreign auto manufacturers with operations in the United States -- Toyota (NYSE:TM), Honda (NYSE:HMC), and Nissan (NASDAQ:NSANY)-- who could easily pick up the slack. Their vehicles are outselling American automobiles. They are building plants in places like East Liberty, OH and Lincoln, AL, providing jobs for people displaced by the failure of Detroit.