Most car companies don't give a strong indication of their monthly sales before the figures' release date. Honda (NYSE: HMC) decided to bend that rule and talk about last month's sales, and the news was not pleasant.

According to Reuters, "Honda Motor Co's U.S. sales in January fell by a similar margin to the 35 percent drop posted in December."

It is important to remember that because the Japanese car company has so many fuel-efficient vehicles, it should do better than the Big Three. It also has a solid balance sheet, so buyers do not have to worry about whether a Chapter 11 filing will void warranties.

Detroit is lobbying very hard for government assistance. Claiming severe hardship, the Big Three automakers -- Ford (NYSE: F), General Motors (NYSE: GM) and Chrysler -- are requesting loans that will prevent a complete collapse of the industry.

The past few days have been full of debate on the matter. With so many issues and questions regarding the merits of a bailout, answers will be difficult if not impossible to come by.

"Throw something up against the wall and hope it sticks" seems to be the modus operandi of the current administration with respect to the financial sector bailout. Now, Detroit is essentially asking for the same thing.

Critics are rightfully upset. There is no guarantee that loans to Detroit will ever be paid back. What results will accrue for taxpayer effort? Is this simply a black hole? Which industry will be asking for help next?

These are all legitimate questions.

The case for the bailout is simple: No money from Washington results in bankruptcy with a chance of complete failure. With that failure comes the loss of three million jobs up and down the auto food chain.

And there is the rub. This is more than just the Big Three automakers -- they and their suppliers are all at risk of complete and total collapse.

One such supplier is Lear Corp. (NYSE: LEA).

The greatest hurdle to the recovery of the auto industry may not be the credit crisis or high gas prices. It may be the UAW. If it decides not to play ball as part of a federal government bailout, the $25 billion being proposed in an aid package may not be enough, and Congress may decide to abandon the plan completely,

According to the FT, "The US United Auto Workers (UAW) union has ruled out concessions – at least for the time being – to help rescue the ailing Detroit-based car industry." Of course, the argument is deeply flawed and is the kind of logic that has helped bring the industry to its knees. Management blames labor. Labor blames management. Both blame the credit crisis. It is a neat circle which leads nowhere and does not do any of the parties any good.

Imagine being a member of Congress handing out billion of dollars that many taxpayers think should not go to an industry that has wounded itself and many economists say will not ultimately save the US car companies. If the parties who will get the benefit are fighting among themselves, the chance that a rescue can be successful is almost certain to be destroyed.

Detroit has shot itself in the foot. Now, it can move the gun to its head.

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

Honda Motor Co (NYSE: HMC) is increasing its capacity by 15% in North America to keep up with the growing demand for its fuel-efficient cars. According to the Associated Press, President Takeo Fukui told reporters that annual production will hit 1.62 million vehicles by 2008, up from 1.4 million. A new auto plant will be built in Indiana, Honda's seventh in North America, and is slated to begin production in late 2008, Fukui said.

Overall, demand has been healthy for Honda's cars in America. Honda has a reputation for good mileage at a time when gas prices are reaching record levels. In comparison, American carmakers are fighting a losing battle against Honda and other foreign carmakers to regain its once-superior positioning. As a group, the market share of Detroit's Big Three slid in June to 50.2% from 56.1% a year earlier.

The Big Three are suffering from a problem they chose nearly a decade ago: focus on inefficient sport-utility vehicles and pickup trucks, instead of fuel-efficient cars.

Much has been made recently of the problems DaimlerChrysler AG (NYSE:DCX) has with its Chrysler unit and the prospect that the unit may be sold.

There has been speculation that it will end up in the hands of private equity firms. Let's hope so. This may be among the best hopes for our struggling domestic auto industry.

First, some have suggested that the deal is too large for PE firms. This is just not the case. Industry experts peg the value of the deal at $60 billion, about equal to Chrysler's annual revenue.

General Motors Corp. (NYSE:GM) says it has cut $9 billion in annual costs. Ford Motor Co. (NYSE:F) is working on lowering expenses by over $5 billion a year. DaimlerChrysler AG (NYSE:DCX) has sent German executives to the U.S. Chrysler Group to try to take $1,000 in expenses out of every Chrysler vehicle. Inventories for The Big Three are so high that dealers do not want to take new cars, even the 2007 models.

Now, industry analysts are worried that 2007 annual car sales could fall well below estimates from GM and Toyota Motor Corp. (NYSE:TM). The two big car companies are forecasting U.S. sales next year at 16.5 million [subscription required].

Trouble in the U.S. housing market, especially in big states like California, could cut sales to 16.2 million units, according to some industry experts. Toyota may be effected because California is a key sales territory in the U.S. The Japanese car giant, however, has the financial resources to weather the trouble.

If sales slow, the company that may be hurt the most is Ford. There is already talk of its bankruptcy. The company itself is saying its market share in the U.S. could drop as low as 14%. What if that 14% share is one of a shrinking market?

Ford execs may have to go back to the drawing board once again.

Douglas McIntyre is a partner at 24/7 Wall St.

One of America's most memorable newspaper headlines -- Ford to City: Drop Dead -- appeared in the New York Daily News on October 30, 1975 when President Gerald R. Ford declined an opportunity to bail out New York City from its fiscal crisis. Today, U.S. auto industry leaders will meet with President Bush and ask for government help with their problems.

As I've noted before, in recent years U.S. automobile manufacturers have made their money on financing cars, not selling them. Competitors from Japan, such as Toyota Motor Corporation (ADR) (NYSE: TM) make cars that customers want with better gas mileage and higher quality than U.S. models. Moreover, customers are willing to pay more for Toyota's cars as TM charges 14% more on average for a vehicle than General Motors Corp. (NYSE: GM) does.

The auto manufacturers want government help with reducing health care costs and currency exchange rates. Beyond speeches, I don't know what will actually change as a result of today's meeting. Yet since Motown is generally a Democratic party stronghold, I'd be surprised if much will happen. Meanwhile, I think the U.S. automakers should devote more management time to making cars that will compete with Toyota's on fuel efficiency and quality and less time seeking government bailouts.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He has no financial interest in General Motors or Toyota.