Chrysler is making noises about getting the UAW, suppliers, and creditors in line so that it can go back to Congress with a restructuring plan. If the federal government likes that new program, Chrysler could get the money to carry it through the end of the year. According to Reuters, Chrysler's CEO recently sent a memo to employees saying "Progress is being made in our discussions with every constituent group, and we're especially pleased with the cooperative and productive discussions taking place,"

Ford (NYSE:F) will present a brilliant plan to Congress. It will build smaller cars to take advantage of the hunger for fuel-efficient vehicles.

According to The Wall Street Journal, "Ford Motor Co. plans to tell Congress it is retooling itself to build small fuel-efficient cars and break from the past strategy of focusing mainly on large pick up trucks and sport-utility vehicles."

The program is not likely to get a warn reception for a number of reasons, the most important of which is that it is too late. Consider that changing over many of Ford's plants to produce small cars will take billions of dollars. Product development and engineering of the new vehicles could take a year or two. In the meantime, Ford will continue to lose sales.

The most important consideration, which Congress should raise right at the start of Ford's testimony, is how it plans to best companies such as Toyota (NYSE:TM) which already build outstanding small cars, have a huge domestic market share, and will be making better and better vehicles while Ford tries to get its act together.

Next question.

Douglas A. McIntyre is an editor at 247wallst.com.

With car sales in the U.S. and Europe in a disastrous decline, the markets of Latin America, India, and China were going to keep American auto companies from falling apart altogether.

That dream appears to be reaching a period of wakefulness. And, the reality is not terribly pleasant. China reported a fall-off of vehicle sales of about 6% in July. India is joining the party. According to The Wall Street Journal, "India's vehicle sales last month fell 4.4% to 94,584 cars from 98,893 cars a year earlier."

While the news may make Washington more sympathetic and help the likes of Ford (NYSE: F) and GM (NYSE: GM) to get huge loan guarantees, the longer-term outlook for global vehicle sales may be much worse than Detroit can imagine.

The theory has been that penetration of cars and trucks among consumers in China and India is low. As the middle class grows, so will the demand for new vehicles.

But, what if the theory is flawed? Slowing economies in developing countries may push back the growth of the middle classes by several years. The new car buying class may not emerge. The people in China and India who can afford cars may already own them.

Detroit was hoping it had been saddled with all the bad news it could handle. Maybe not.

Douglas A. McIntyre is an editor at 247wallst.com.

March is expected to be another bad month for US car sales. Domestic manufacturers are likely to have the worst of it. According to Reuters, "A sharp decline in March sales could also heighten concerns that the world's largest market for cars and trucks is on track for its weakest year since 1994." JD Power and other analysts now expect US car sales to be below 15 million units, well short of the 16.1 million sold last year. If the recession deepens, the number could move toward 14.5 million.

A very sharp drop in units sales could take $40 billion in vehicle sales out of the market compared to last year if the average car costs $25,000. For Detroit, which now only has about 50% of the US market, that would be a disaster.

Despite money taken out of the car companies through factory closings, layoffs, and a new UAW contract, the Big Three are still not set up for an extremely sharp drop in revenue. Ford (NYSE:F) and GM (NYSE:GM) trade about where they did just over two years ago when there were rumors of bankruptcies.

Those rumors will start again, and for good reason.

Douglas A. McIntyre is an editor at 247wallst.com.

No matter how much Detroit would like to change the math, the total always adds up to 100%.

Over the course of the last week, management from GM (NYSE: GM), Ford (NYSE: F), and Chrysler have tried to convince the industry and investors that this would still be a year when domestic vehicle sales will hit over 15.5 million. JD Power recently revised its forecast down to 14.95 million. High gas prices and a tough economy could make that number worse.

Toyota (NYSE: TM) said yesterday that it may not make its global sales goal for 2008, mostly due to poor performance in the US, Europe, and Japan.

Nissan says its market share in the US will increase in March. According to Reuters, Nissan said "U.S. sales were in line with its March targets and it expects to win a higher market share despite increasing concern about the economy."

In the math of the car business, that means someone will lose share. If it is one or all of the US car companies, the dream of 2008 being a good year fades closer to black.

At 14.5 million vehicle sales, the US market produces about $40 billion less in car revenue than it did last year when sales were 16.1 million. GM had a 25% share last year, Ford 15% and Chrysler a bit over 12%.

Shrinking pieces of a shrinking pie.

Douglas A. McIntyre is an editor at 247wallst.com.

December car sales at the "Big Three" are likely to fall about 7% according to a survey by Bloomberg. That would put total vehicle sales in the US at about 16.1 million for 2007, the worst year since 1998.

The obvious causes for the dropping demand for new cars are the housing crisis and high fuel prices. What is less apparent is that a recession in vehicle demand could wipe out the value of most of the cost savings that GM (NYSE: GM), Ford (NYSE: F), and Chrysler have gotten from cost cutting and new UAW contracts.

GM claims that it has cut annual costs by $9 billion. It has also transferred the liabilities of its health plans for workers to a new UAW fund which should drive further expense reductions.

Now, two forces are working against auto company revenue. The first is falling demand which could cut US car sales another million units in 2008, according to some industry experts. The second is that Detroit may need to offer larger incentives to keep the Japanese from getting more market share. Those incentives will eat into profit margins.

Ford and GM trade near multi-year lows now, and that could get much worse.

Douglas A. McIntyre is an editor at 247wallst.com.

The cornerstone of GM's (NYSE: GM) contract with the UAW is that the company will fund a health benefits pool run by the big union. The car giant will probably move $30 billion into the pool and will part with a $50 billion employee healthcare liability. In turn, GM will guarantee a certain number of jobs.

That deal may not work for Ford (NYSE: F) or for Chrysler for that matter. The No.2 US car maker needs expense relief now. Its sales keep falling, and were off over 20% in September. Bloomberg quotes one expert who sums up the issue nicely: ``Ford isn't interested in job guarantees'' as the company shrinks, said Gary Chaison, a labor professor at Clark University.

Ford's problems are acute. While it may want to get health and pension liabilities off of its balance sheet, it still needs to cut is North American costs by a large amount. GM's sales seem stable, but Ford's past focus on pick-ups and SUVs has put it in a bad spot. As fuel costs have risen, these vehicles have become less attractive. Without large cuts in workers, its North American operations could continue to lose billions of dollars a year.

The chances for a strike in Detroit are rising again. But, this time the target will probably be Ford.

Douglas A. McIntyre is a partner in 24/7 Wall Street.

California Attorney General Jerry Brown is reported to have stated that the Federal government may need to bail out the American auto industry from its financial problems. His reasoning is based on the auto makers' "refusal" to manufacture more fuel efficient cars. He places blame upon the government and the industry and, of course, he sees basis for much expensive litigation. Then he points his finger directly at us and makes it clear that it is his opinion that the taxpayers must foot the bill for all of it.

Yes, the American auto industry is playing out a saga that reads like "going to hell in a hand basket." I, myself, have no desire to see the government step in. Let's let the big boys figure it out for themselves, even though it's going to hurt a bit. If Attorney General Brown is so disappointed with how the government has addressed auto makers thus far, why in the blue blazes would he send the buggers back there with fists full of dollars? Honestly, Jerry, don't they call that sending good money after bad? The difference here is that Jerry Brown wants the squandering to go outside the boundaries of company profits and into the public coffers. How wonderfully socialist of him.

I'm just as disappointed with the current status of the American auto industry as anyone else. I feel very bad about all the job losses the industry has suffered and I'm disgusted with the performance of the unions. I have no magic solutions to offer and I fear that things will get much worse before they begin to get better. One thing I can tell you for sure: If Attorney General Jerry Brown thinks that the salvation of the American auto industry rests in the diversion of tax dollars into its hands, then all I can stress is that he himself needs to be immediately removed from the government payroll.

But that's just my opinion.

DaimlerChrysler AG (NYSE: DCX) and Kirk Kerkorian's Tracinda Corp. are renewing their long-standing feud in the pages of the Wall Street Journal.

Kerkorian, the billionaire who tried to buy Chrysler in 1995, last week offered to by the money-losing automaker for $4.5 billion and even promised to put down a $100 million deposit. DaimlerChrysler's executives, though, aren't taking the bid seriously, the Wall Street Journal said.

According to the Journal, Tracinda wanted DailmerChrysler to shoulder some of Chrysler's $15 billion in pension liabilities and retiree health care costs, something that other bidders haven't sought. DaimlerChrysler also balked at Tracinda's request to for exclusive rights to conduct due diligence for 60 days, the paper said.

Of course "people familiar with the matter" in Tracinda's camp see things differently. DaimlerChrylser, which is holding meetings with the private equity companies interested in buying Chrysler, denied to the Journal that its discriminating against Kerkorian.

This is what people mean when they talk about negotiating though the press.

The campaign of leaks and counter leaks has just begun.