The auto industry is deep in the weeds right now, particularly in the United States. American manufacturers are hemorrhaging money -- General Motors (NYSE: GM) alone has lost $30 billion in the last three years -- as high gas prices and an unofficial but very real recession forces consumers to abandon their American-made trucks and SUVs by the millions.

Even with the pronounced shift toward smaller and more efficient cars, the overall auto market in the U.S. is shrinking thanks to the poor economy, and most manufacturers are selling fewer vehicles. But one company stands out as an exception to the rule of declining sales: Honda Motor Ltd. (NYSE: HMC). In the first seven months of 2008, Honda increased its sales by over 3%. By comparison, Chrysler lost 22%, GM fell 17%, Ford (NYSE: F) lost 14% and even mighty Toyota (NYSE: TM) saw a decline of 7%.

An interesting quote in The New York Times from Tetsuo Iwamura, the president of Honda's North American operations, sheds light on how Honda has managed this impressive feat. Honda, Iwamura said, "is a philosophy-driven company." And what is Honda's philosophy? According to Iwamura, "we want to make Honda the company that society wants to exist."

From an American perspective, this is an extraordinary statement. American automakers have followed a very different philosophy for many years, one in which fat and easy profits from poorly designed and hopelessly wasteful SUVs take precedence over the long term health of both the auto industry and society as a whole. But Detroit is suffering now for its short-term approach, while Honda is showing both consumers and investors the value of planning for the long run. And at $32 a share and a P/E of 10, Honda looks like a good long-term buy.

With great fanfare, General Motors Co. (NYSE: GM) announced it was spending $500 million developing the Chevrolet Cruze, a so-called next generation compact car. Investors, who have seen the value of GM's stock slip 60 percent this year, could not have cared less. Shares of the company, which for now is the largest automaker, closed down for the day.

Granted one car is not going to revive General Motors' fortunes, but the Chevrolet Cruze clearly is a step in the right direction. For one thing, it's got a nice design though it certainly did not blow me away. The automaker clearly is trying to build on the popularity of the Chevrolet Cobalt whose sales are up 16 percent year to date. It aso underscores how General Motors is trying to be more efficient.

"The Chevrolet Cruze was designed and engineered by our global teams in Europe and Asia Pacific and will be manufactured in those regions in addition to the assembly plant here in Lordstown, Ohio," said Chief Executive Rick Wagoner in a press release. "Our goal for the Chevrolet Cruze is to lead in fuel economy in this very competitive car segment.

But it's also taking a gamble here.

As the Wall Street Journal points out, "The auto maker believes growing demand for nicer, well-equipped small cars coupled with a dramatic redesign for the Cruze will be enough to command sticker prices well beyond the $15,000 base price of a compact Chevrolet Cobalt."

For Wagoner to keep his job, he's going to have to sell lots of them along with the company's pick-ups and SUVs, which the company and consumers are less enthused about.

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Fiat below in the comments.

Sometime in the 1970s, some wag dubbed the Fiat Fix It Again Tony, because at the time the Italian cars were awful -- they were built with cheap Russian steel that rusted easily. Their reputation among American consumers has never recovered.

"Modern Fiats are actually pretty respectable thanks to modernization of materials and manufacturing processes, unfortunately most Americans still think of the old phrase 'Fix It Again Tony' because Fiat has not sold cars in North America since 1982, and therefore that is the last Fiat anyone there has usually seen," according to the Urban Dictionary.

Maybe Fiat's absence from the U.S. market is not a bad thing. Writing in BusinessWeek, Helen Walters described the Fiat Punto as being riddled with design flaws, including one that is a safety hazard. "As it happens, I'm not in the market to buy a car," she writes. "But if I was then the Punto wouldn't make it anywhere on the list."

Looks like the old Fiat joke is not going away anytime soon.

Advertising revenue at big media companies is being beat up by the economy. Traditional media like newspapers are losing boat loads of money to the internet.

With most large TV network companies showing flat revenue and newspaper chains struggling with double-digit losses, the falloff in auto advertising is likely to make the second half much worse.

According to The New York Times, "In the first quarter alone, the auto industry spent $414 million less on advertising than in last year's first quarter, according to TNS Media Intelligence."

What can media companies do? For one thing, give money-losing companies a discount. For a newspaper or magazine to print extra pages adds only modest expense. Putting extra banners on internet sites costs next to nothing. The same is true with TV ads. They cost money to produce but not to run. In other words, cut-rate car ads are better than no car ads. Media companies may have lower margins, but at least their revenue does not have to drop of a cliff.

From a media standpoint call it the "auto company preservation act.". Detroit may not make it out of its current dilemma alive. Any help it gets increases it chances to become healthy again. If the domestic auto business can recover, so will its marketing spending.

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

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

More than one U.S. automaker found its way onto our roster of SPX underperformers, and so it comes as no surprise that The Goodyear Tire & Rubber Company (NYSE: GT) also makes an appearance. The stock peaked at $76.75 in March 1998 -- around the same time that Plains Resources agreed to acquire GT's All American Pipeline System, along with two other businesses, for $420 million in cash.

What went wrong? At number 20 on our list of SPX losers, GT shed 72% of its value during the 10-year period ending June 30, 2008. Declining auto sales at General Motors (NYSE: GM) is a topic that's made headlines as recently as this month, but Goodyear started feeling the impact of slowing auto sales well before the millennium turned.

Just about ten years ago, in the summer of 1998, a strike at GM resulted in an oversupply of tires. Goodyear was forced to lay off workers, and the company's third-quarter earnings report was a disappointment that year. In a bid to stay competitive in the struggling auto industry, Goodyear teamed up with Sumitomo Rubber Industries. It was not just a strategic move; it was a merger that fulfilled the recent prophecy of then-CEO Samir Gibara: he'd vowed in 1998 that Goodyear would surpass Bridgestone and Michelin to be the #1 tire company in the world. Of course, this particular bragging right cost the company $936 million ... and let's just say that GT couldn't exactly write a check for that amount.

As expected, Ford Motor Co. (NYSE: F) posted dreadful results. But the numbers were even more awful than Wall Street feared, sending shares of the company plunging in premarket action.

The number three automaker -- at least for now --- posted a net loss of $8.7 billion, or $3.88 a share, for the second quarter including a $5.3 billion write down of its North American auto business and another $2.1 billion charge. A year earlier, Ford had a net profit of $750 million, or 31 cents per share. Revenue excluding special items fell to $38.6 billion compared with $44.2 billion during the year earlier period.

Excluding one-time expenses, the loss was $1.38 billion, or 62 cents. On that basis, analysts had expected a loss of 27 cents on revenue of $34.6 billion, according to Thomson Reuters.

To no one's surprise, Ford (NYSE: F) will detail its plans to dive into the small car market when it announces earnings on Thursday. It is a lot late to get religion.

According to The New York Times, "as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines." The bet is a smart one, but it may not matter.

Ford is now close to a decade behind the curve. Companies such as Toyota (NYSE: TM) have produced small cars for the US market since the days they began to open dealerships in America as Ford chased immediate profits in pick-ups and SUVs. The margins in these products were outstanding, but their success relied on gas staying at $2 a gallon forever. Things did not work out that way.

Ford will now go through a process of more cost cutting, firings, and expensive retooling of its plants. To make all of this work, the car company will have to borrow money or sell more stock. In either case, current shareholders are likely to be diluted.

Ford has been so slow to move into the market for fuel-efficient vehicles that it may have trouble staying solvent if the US car market stays very soft for the next two years.

That means Ford's future as an independent company could be in jeopardy.

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

Ford Motor Co. (NYSE: F) will be handing out employee buyout offers next week at plants in Michigan and Ohio. Just as the automaker continues grappling with a declining market share and lower sales, it needs to trim its workforce to match.

The automaker has already given employees at plants in Ohio and Kentucky the option of leaving the company with a payoff, so this is nothing new. Offers will be made to employees at 14 sites throughout Ohio and Michigan, with possibly more buyout offers coming to more facilities in August.

As expected, the buyout offers are for five assembly plants in addition to supporting facilities that make engines and transmissions. It's a pretty good guess that all those plants and parts come from the large truck and SUV world, as Ford said it is slowly trending away from building so many of these vehicles. What's amazing is that the automaker warned of slowing truck and SUV sales way back at the end of 2005. It's just now seeing the fruits of it not paying much attention pay off.

Ford's Way Forward plan to return to profitability won't come in 2009 as expected, and will probably show progress in 2010. If gas prices stay near current levels into 2009 and Ford still hasn't rearranged its product portfolio to be as flexible as the U.S. customer needs it to be, it may be beyond 2010 for Ford to see a consistent profit.

As if Detroit needed any more bad news, there are reports that yet another foreign producer of sensible, efficient and fun to drive cars is planning a raid on the domestic market share of the SUV-producing giants.

Apparently Germany's Volkswagen (OTC: VLKAY) is considering building a new plant in Alabama to produce Jettas and next-generation Passat sedans, and possibly a small new SUV called the Tiguan, as well as the Audi A5. The plant will cost an estimated $788 million and employ several thousand workers. No decision was made about the plant's location at a meeting on Wednesday by Volkswagen's management board, and VW is reportedly also considering sites in Tennessee and Michigan.

This would not be the first time VW produced cars in the U.S. From 1978 to 1988, the company produced over a million vehicles, mostly Rabbits, in New Stanton, Pa., near Pittsburgh. But VW's quality and reputation suffered in the 1980s, and the company now has less than 2% of the American market. However, VW is making a great comeback across the globe, and senior managers must think the time is right to start selling more cars in the massive North American market, the world's largest.

It was only yesterday that I posted Serious Money: GM, GE, Gee Wiz!, concerned that Barron's was betting on the wrong horse (which happens all too often -- see Sunday Funnies: Big Brown a sure thing at Belmont) as it pumped up General Motors (NYSE: GM) in a cover story two weeks ago.

GM stock closed yesterday at $12.81 but today traded down to a new 52-week low of $11.21; as of 1:15, it is at $11.51, down nearly 10%.

GM is trading at a 30 year low. "Today's drop came after a Goldman Sachs analyst cut his rating for GM to "Sell" from "Neutral" and his price target to $11 from $16, saying things could still get worse for the North American automotive industry as a whole."

I wonder if he read my post yesterday . . . probably not. I am not a big fan of analysts as a group but this did not take a crystal ball. Barron's should do a follow-up story explaining how their crystal ball got so fogged up.

GM (NYSE:GM) went back to huge incentives to move out inventory and keep its sales churning, at least at a modest level. Its product mix, with too many SUVs and pick-ups, is bleeding the company as more buyers move to sedans which burn less gas.

Under the company's latest program, the big car company will "offer zero-percent loans for up to 72 months or cash rebates of up to $7,000," according to The Wall Street Journal.

What may not be apparent, at least at first blush, is that the program costs GM some real money. It has to come up with the capital to finance the customer's borrowing. It does not get that money without paying interest. GM sells a car, gives up the 4% interest it might have earned each year, and has to find capital to make the loan at a time when its corporate cash balance is falling..

The other problem GM has is that the rebates and low financing devalue the car itself. The consumer is getting a "cut rate" vehicle. When the time comes to launch next year's models, people are not going to be willing to pay huge increases which include the normal annual price increase, but without the incentives. In theory, a buyer could move from $25,000 for a 2008 model of a GM sedan to $32,000 for the same model for 2009.

Incentives cut the price that GM can get on a brand, not just in the year it is sold, but for at least a year after. And, the money GM loans the customer is not "interest free" for GM.

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

With GM's (NYSE: GM) shares at a multi-year low at about $15 and shares in Ford (NYSE: F) still selling off most days, who would want to gamble that they could move lower. Short sellers, among other people.

The short interest in Ford is now larger than that of any other company traded on the NYSE. Shares short in the company hit 317.6 million as of June 15, up 31.3 million from the end of May. At GM that number rose 14.9 million to 120.2 million.

The fact that the car companies will keep losing money because of poor domestic sales and high fuel prices is not enough to justify a belief that their shares will go lower. The news would have to be worse than that, and it might be. GM has talked of a possible need to raise money around the end of this year. That means significant dilution for current shareholders which would almost certainly push down the stock price.

If Detroit tries to use debt to fill its bank accounts, the matter may be worse. Ford and GM both have junk debt ratings. Borrowed money would come in at terribly high rates of interest.

A strong bet against Ford and GM is a good bet. They have run out of options to increase sales and improve their balance sheets.

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

This post is part of a series on some of the most memorable companies that have disappeared.

Don't we all remember the DeLorean Motor Company? To those that were market watchers or just fascinated auto industry types in the 1980s, you'll remember the DeLorean. Many of us remember the car used in the Back To The Future films, which was the trademark stainless steel DeLorean. The DeLorean Motor Company was formed in 1975 by auto executive John DeLorean, whose stainless steel, gull-wing door sports car model became the image for the entire company.

John DeLorean, who became the youngest executive ever at General Motors Corp. (NYSE: GM) before launching his own auto company, was known as a capable engineer and businessperson. The DMC-12 sports car, which was stainless steel and thus all looked alike (could not be painted) suffered from lack of actual demand, even with a huge amount of publicity. In 1982, the DeLorean Motor Company went into receivership and bankruptcy as a result, just seven short years after being formed. Some 2,500 jobs and over $100 million in various investments went down the drain when the DMC went out of business in 1982.

GM (NYSE: GM), which decades ago had almost 50% of US car sales, may see its share of the domestic market drop below 20% for the first time since the company was formed. It has relied on big sedans, SUVs, and pick-ups for too long. Now, with higher gas prices and a consumer who has no money, the big car firm has to face the music.

If GM has come to this, one question worth asking is whether its was bad management or bad luck that brought the company so low? According to The Wall Street Journal, "Sales of pickup trucks and big sport-utility vehicles -- Detroit's bread-and-butter products -- have been falling for the past few years."

GM's management did not tackle its labor issues until recently. Before that, the car company was built for success but not tough times. Its UAW contracts assumed that things would go well and that the firm could support a large workforce and generous pension plan. A strategy for bad years was never really in place.

GM's other mistake is that it did not use its very broad product line and large number of brands to create and market more mid-sized cars with good fuel mileage. With dozens of different products, more should have been devoted to buyers who cared about gas and did not want vehicles that get less than 20 miles per gallon.

Bad planning has come back to haunt GM.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Toyota (NYSE: TM) has arguably been more successful in the US car market over the last 10 years than any of its rivals. Its high-quality, modestly priced cars have helped it consistently raise market share while GM (NYSE: GM) and Ford (NYSE: F) have lost ground.

Now, the Japanese company is beginning to realize that the US auto picture is so bad that even its quality and fuel-efficiency may have limits when the world's largest market falls into a recession. According to the FT, "Toyota, the world's top-selling carmaker, is considering downgrading its US sales forecast to account for a worsening outlook for pick-up trucks and other big vehicles in its largest market."

Toyota had hoped to sell 2.64 million vehicles in America this year.

Toyota's main problem is that it did not stick to its knitting. The success of pick-ups and SUVs was so significant that it began to invest in and manufacture its own gas guzzlers. The net result was that, as gas prices rose, it was trapped in the same box as the US car companies. Consumers will not buy trucks from any car company, no matter how good the product is.

Toyota will survive the downturn in the US. It has a tremendous balance sheet and does well in a number of markets, especially Japan. But, if car sales drop from 16.1 million units in 2007 to well under 15 million this year, Toyota's US rivals may not be so lucky.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.