Sales of vehicles from Detroit's Big Three have been weak and getting weaker lately. But the bad news is even worse when you look at just basic passenger cars. According to a piece in BusinessWeek (appropriately titled "Car Sick"), American products accounted for less than a third of all car sales in July, a new low for the industry.

In July, imports grabbed 68% of passenger car sales in the U.S., leaving General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler with only 32%. And some of that meager number include fleet sales to rental agencies, which produce very slim profits. Factoring those out, BusinessWeek estimates that Detroit's share of the American passenger car market is about 25%.

One stunning illustration of just how bad things are: in July, GM's entire Buick division sold just 6,000 cars. Compare that to just one Toyota model, the Camry, which sold over 42,000 units in the same period. And there are roughly 2,700 Buick dealers, about twice the Toyota figure, which means that on average each Buick dealer sold 2.2 cars during the month. You have to wonder how they manage to stay open.

It's no secret how this situation came about. The Big Three bet their collective house on trucks and SUVs in the 1990s, not cars, and now they are paying the price of that unwise gamble. Despite the arrival of decent (though hardly stellar) cars like the Chevy Malibu and the Ford Focus, American passenger cars have a long way to go before they can once again sustain the American auto industry.

Over the past year, automakers have struggled to deal with the tough economic conditions in North America, especially the United States. One of the companies that has been able to handle the slowdown better than its peers has been Toyota (NYSE: TM). But the effects are being felt even by the Japanese automaker, as made clear today in the news that the company is laying off 800 workers in one of its Japanese plants.

The 800 workers that are being laid off represent about 10% of the workforce at the company's plant in southwestern Japan. So far, the company has been able to sidestep the steep losses that its American rivals have been forced to deal with, but this year is proving to be a bit tougher, as the company is now predicting a first annual drop in profit, which would be the first time in the past seven years that the company has seen profit fall.

Toyota has been more fortunate than many automakers, mostly due the fact that the company has a long history of building smaller, more fuel efficient cars. This fact alone has helped it weather the slowdown that record high gasoline prices in the U.S. have helped create. Last Friday, however, the company stated that sales dropped 18.7% in July from the same period last year.

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.

Although Ford Motor Co. (NYSE: F) has fallen on hard times -- like much of the auto industry -- the company will eventually come back around. Its success, like that of competitor General Motors Corp. (NYSE: GM), will be on its ability to be flexible enough to build the vehicles customers want as needs change.

That's a large order, though. Ford CEO Alan Mulally recently stated that his Way Forward plan was behind schedule, and the automaker wasn't expected to post an annual profit until 2010. Ford knows it needs to be more globally flexible or it won't even make that extended target. Profit centers like SUVs are so 1999.

On top of all that, a Volkswagen (OTC: VLKAY) executive recently said that the German automaker intends to surpass Ford to become the third-largest seller of vehicles in the world. That's quite a bold prediction and it puts Ford under even more pressure to get automobiles delivered to customers with increasing manufacturing and selling flexibility. As of last year, Volkswagen sold 6.19 million vehicles to Ford's 8.55 million. Is one year enough of a background to declare VW a future winner over Ford? Possibly.

Then again, Japanese automakers Honda Motor Corp. (NYSE: HMC) and Nissan Motor Co. (NASDAQ: NSANY) are not going anywhere and will continue to put up a great fight. Toyota Motor Co. (NYSE: TM) is currently the king of the Japanese automakers, right behind GM globally. If Volkswagen really believes it can charge into the third spot, it better have the global vehicle finesse to know what its regions' customers want before they want it -- and then, make those sales.

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 probably should come as no surprise, but June was a tough month for automakers, and all signs are pointing to more troubles out on the horizon.

All but one major automaker saw their sales drop last month, with Honda Motor (NYSE: HMC) being the sole exception. For the month, Honda actually had a 1% year-over-year sales growth, which given the current market place was an exceptional feat.

So just how bad was June for the automakers? Pretty bad. During the month, combined auto sales fell to 1.19 million vehicles sold, a 266,000 decline from the same period last year. This just continues the trend that we have been seeing all year, amounting to roughly a 10% sales decline during the first half of the year.

Ford (NYSE:F) is going through its worst sales period in over 20 years. Its flagship during most of that period has been its F-Series pick-up. The truck has sold like mad and it is highly profitable for the car company.

The F-Series trucks are heavy and eat a lot of gas. According to The Wall Street Journal, "Ford has started searching for answers to a question it never used to pay much attention to: exactly who drives big pickups and why."

Ford figures some of the people who buy the pick-up don't need it to haul things or tow things. They are people who want to look tough and have that working man image. The car company is trying to find a way to keep these people even though they could drop down to more fuel-efficient vehicles.

If gas hits $5, and it may, the probability that people will buy pick-ups to be "cool" goes away very quickly and Ford will almost certainly lose a lot more of its F-Series customers.

Of course, if gas hit $5, Ford has much bigger problems.

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

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.

Well, I can't predict when the market will turn, or when Toyota's (NYSE: TM) stock will once again be in favor, but I can tell you that I won't be buying its shares here. According to this article, Toyota may not do as well as it planned in terms of sales in 2008 in the U.S. market. The company told investors that year-over-year growth in the number of cars sold is now in question. In 2007, Toyota moved 2.62 million automobiles in the U.S., and for 2008, Toyota wanted to sell 2.64 million cars.

I probably don't need to say it, but I will: considering the negative trends in oil futures, gas prices, consumer confidence, inflation, recession potential, and the housing industry, the fact that the stocks of Toyota, General Motors (NYSE: GM), and Ford (NYSE: F) are having a really tough time right now is not surprising. Toyota's stock closed down 2% on the news of the sales struggle at the end of Tuesday's trading session. That's not a particularly horrible downward move, and the stock is still a few bucks above its 52-week low, but I think there's a chance the stock will take out that low at some point.

Investing in the auto industry might be a dicey move here. Sure, you could pick up some bounces, but being early in this space could prove depressing for even the heartiest investor. Auto sales might get worse before they get better (they're pretty bad now as it is), so I'll stay away from Toyota and this sector.

Disclosure: I don't own any company mentioned here; positions can change at any time.

The big news just keeps coming in the global auto industry, and today it's about an unprecedented event in the American market: for the first time ever, the Big Three were outsold by their Asian rivals.

That's right -- Asian manufacturers now sell more cars in the U.S. than American ones do. The numbers look like this: in May, the Big Three -- General Motors Corp. (NYSE: GM), Ford Motor Company (NYSE: F) and Chrysler -- had a market share of 44.4%, while ten Asian automakers beat them easily with 48.1% of the domestic market.

The other big news helps explain the first: a sedan was the top selling vehicle in May. This hasn't happened in 16 years. The vehicle models involved make the reason obvious: the thrifty and efficient Honda Civic (NYSE: HMC) outsold the long-time leader, the large and low-mileage Ford F-150. And the Civic was not alone. The F series trucks, whose sales plunged 33%, were also outsold by the Honda Accord and two other cars, Toyota's (NYSE: TM) Corolla and Camry.

How low can Detroit's market share go? With $4 a gallon gas here to stay, we'll have plenty of time to find out.

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.

All of those green people in all of those green cars. The Toyota (NYSE: TM) Prius was a gamble when the auto company first designed and built it. The price was more than its "all gas" counterparts because the electric component of the engine was expensive to build. The Japanese firm had to bet that buyers would want to save the environment by purchasing an automobile aimed at cutting emissions.

All of that planning by Toyota worked. The Prius has now sold one million units worldwide. Reuters says that the car company said "Toyota believes that Prius vehicles worldwide have contributed to a reduction in carbon dioxide emissions by producing approximately 4.5 million tonnes less CO2 when compared with gasoline-powered vehicles in the same class and of similar size and driving performance."

And who is to say that the calculation is wrong, at least by much.

Toyota has once again put its competition in a situation where they have to catch up. When the company began to produce almost flawless cars 20 years ago, Detroit and Europe had to up their quality to stay in the game. Now they will need to aggressively follow Toyota into the hybrid market.

Being first to market sometimes has its advantages.

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

The short interest in Ford (NYSE: F), rose 11.3 million shares to 283.1 million. The numbers compare shares sold short on April 30 in contrast to the number on April 15. Ford is now the most shorted company listed on the NYSE.

Ford has made a big deal about its turnaround. Some investors are buying the story. Ford's shares are up 20% this year.

But short sellers have a case, and it's a powerful one. Ford's US sales are still down by double digits most months. Sales of its most profitable cars and trucks, including its flagship F-150 pick-up, are dropping sharply, probably because of the rising cost of gas.

Ford's case is that it can continue to cut costs in the US and that its international sales are good. It is an argument that does not hold water. Ford has about 15% of the domestic market. How far can that fall? US sales need to support the company's factory and management costs on top of product development and design.

Ford can't count on all of those dollars coming from overseas.

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

There's also the bullish case: Ford (F): A bullish case for a turnaround

Even a global company like Toyota (NYSE:TM) cannot escape the slowdown in the US market. The Japanese auto company reported it Q4 profits dropped 27%, more than expected.

Bloomberg reports, "The slowdown in the U.S. really hit Toyota,'' said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which oversees $28 billion in assets. "The market has yet to hit bottom.'' Indeed, for most car companies, US sales fell by double digits in April. Toyota did somewhat better, but "somewhat" is not enough.

The news reflects how difficult it is for multinationals to do well when the world's largest consumer market is doing poorly. It raises the question about what the financial results from large companies in Europe and Asia will look like as the year goes on.

The Toyota earnings are a sign that the US slowdown could move to export companies in places such as China and Vietnam, which rely heavily on selling goods into the American market. The bad news from America is starting to send waves to foreign shores.

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

It's not like it was a surprise, and yet the magnitude of it still managed to astonish me somewhat. Yes, I'm talking about the abysmal March car sales automakers reported Tuesday. Wait, wasn't it April's Fool's? Was it just a hoax? I wish, but this was no joke, only another sign of the condition of the U.S. economy. Consumers, burdened by record high gasoline prices, a housing correction not seen in many years, a credit crunch and food inflation, decided big ticket items should not be on their shopping list.

In numbers, General Motors Corp. (NYSE: GM) reported a 19% drop in U.S. sales during March, Ford Motor Co. (NYSE: F) reported a 14% decline, Chrysler - a 19% decrease, and even Toyota Motor Co. (NYSE: TM) said sales were down 10% compared with a year ago sales. Nissan Motor Co. Ltd. (NASDAQ: NSANY) sales fell 4% and Honda Motor Co. (NYSE: HMC)'s 3%. Porsche -- much like Ford's recently sold luxury brands -- had a bad month with a 25% drop in sales, while BMW 's sales were down 5.4%.

Now, automakers warned things could get even worse in the near term, which should make investors worried, especially those holding shares of Ford and GM. The already struggling American companies, already losing money in North America, stand to feel the revenue loss, and being in the midst of massive restructuring, that could hurt their ability to weather the storm.