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.

With gasoline prices sitting at record highs, and the auto industry struggling to deal with the situation, there is a new shift in the design of cars. Historically, when you bought a smaller engine car, that engine came in a vehicle that had far less in the way of comfort and amenities... well, that is changing.

Think back a few years. You went to your local auto lot to pick up a new car, and your first choice was what size engine you wanted, the heavy duty 8-cylinder, 6, or 4-cylinder car? Suppose you decided the 8-cylinder was for you, can you picture the car that supported this engine? Typically these cars had all the bells and whistles you could imagine: the sunroof, the leather seating, fancy radios, power windows, etc. Basically, the bigger the engine, the better the "packaging" that it came along with.

Now, picture the 4-cylinder car from the past. Not much to picture here. Power windows? Doubtful. Yes, the 4-cylinder cars of the past were typically your bare bones vehicle with few fewer amenities than those coming with the 8-cylinder alternatives. If you were lucky, you would at least get some power steering in the car, but that was not always the case either.

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.

Presumptive Republican presidential candidate John McCain's plan to award a $300 million prize "for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars " raises many questions.

For one thing, what does he mean by "leapfrog?" Does the McCain car have to be 10?% better? 20% better? or 30% better? Will a marginal improvement suffice? Moreover, who is going to decide whether the goal is met? environmentalists? the automakers? the government? These people can not agree on what we should do to reduce air pollution; I can't imagine the fights that will occur over what constitutes a technological "leap."

McCain wants the car to deliver a power source at 30% of the "current costs." Does that mean costs as of 2008 or whenever this wonder car is ready to be sold to consumers? How does he define "costs?" Is it the total cost of ownership or a reduction in the sticker price or something else entirely? Why limit it to batteries? What about hydrogen fuel cells whose only pollution is water vapor?

In a speech he delivered today, McCain pointed out that "right now we have a hodgepodge of incentives for the purchase of fuel-efficient cars." Indeed, purchasing a hybrid only makes economic sense for the most die-hard of tree huggers. But is the answer to skyrocketing gasoline price to be found in a contest? I am not so sure.

Ford Motor Co. (NYSE: F) has decided to take even more costs out if its operations. Where it will find the people and extra expenses is almost impossible to imagine. According to The Wall Street Journal (subscription required), "with more than half of Ford's plant saddled with excess capacity, Ford officials believe the push to control overtime is paramount."

The car company is also sending signals that it will have to take out more people.

Ford has almost certainly reached the fork in the road. At some point, the company will not have the capacity to rebuild its business when the domestic market begins to come back. The real competitors in the market, Toyota (NYSE: TM)and Honda (NYSE: HMC) will keep investing in new development and marketing, and will keep their abilities to manufacture new products at reasonable levels.

Ford may be able to save its present by sacrificing its future. And, if things go badly, it will not matter how much the company cuts. The U.S. car market is that bad.

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

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.

With gasoline prices going through the roof lately, the main question on every motorists' mind has been how to save some money at the pumps. The obvious answers are to either drive less, or buy a car that uses less gas, preferably a gas-electric hybrid. Hybrids, unfortunately, are pretty expensive, but Honda (NYSE: HMC) has announced plans for releasing an affordable gas-electric hybrid next year.

Honda plans on this new hybrid to be a brand new car model for the company, and the model will only come in the hybrid version. In addition, it will also be coming out with new hybrid versions of its already popular Civic and CR-Z.

The company's President, Takeo Fukui, stated that there has been a lot of attention placed on hybrids recently, and that now was the time to "go to the next step." He did not make any predictions on just how much the new hybrid-only model would cost, other than it would be affordable. There was also no mention of the name for the new model, but some descriptions were given, including that it would be a 5-door sedan with new weight reduction technology to help improve the vehicle's efficiency.

Gasoline prices continue to increase along with crude prices, and the latter seem to find a new record every single day. Wasn't it just a few months ago that the media was going crazy about oil reaching the $100 per barrel mark? It hit $122 this week. Now, that's not a year later; that's less than half a year later. It's not surprising then that automakers with an inflexible SUV-selling strategy are getting pummeled, while automakers with a decent offering of gas-efficient vehicles are seeing product mix changes in retail sales.

Ford Motor Co. (NYSE: F), which showed a surprising profit in its most recent quarter, said that it plans to really up the presence of gas-efficient six-speed transmissions by the end of 2009, and wants to have these transmissions in 98% of its North American vehicles by 2012. If Ford follows through with this commitment, it'll be a game-changer for the industry. And, it will force General Motors Corp. (NYSE: GM) to do the same thing. Ford stated that the newer 6-speed automatics will get 4% to 6% better gas mileage than the standard 4-speed and 5-speed automatic transmissions.

GM is not sitting idly by at the same time, though. It debuted a 6-speed automatic transmission in the popular 2008 Chevy Malibu, which it is pitting as a strong competitor to market leaders Honda Motor (NYSE: HMC) Accord and Toyota Motor Corp. (NYSE: TM) Camry. Will the new trend in the consumer vehicle market be smaller 4-cylinder engines with advanced, fuel-efficient 6-speed automatic transmissions? You can count on it until oil prices fall to $50 a barrel. And, that'll be when pigs fly.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

For two companies with similar backgrounds, Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. (NYSE: HMC) have grown markedly different. Toyota has taken a vertical approach to become arguably the world's premier brand in combining high volume sales with high-quality products. Honda has taken a much more horizontal route, dipping its feet successfully into a wide range of products.

In 2007 Toyota passed Ford Motor Co. (NYSE: F) as the world's second largest auto manufacturer. However, some question whether this victory came at the sacrifice of quality; Consumer Reports, which had consistently rated the company's cars at the top of its quality rankings, declined to recommend many of its models due to concern about slipping reliability. Its secondary line of autos, the Scion, which is targeted to a younger driver, is still scrambling for traction in this crowded field.

Honda's horizontal approach has taken it into farm and garden equipment, lawn mowers, motorcycles, even airplanes and soybeans. However, four-wheeled vehicles remain its core industry. Toyota's quality stumbles have opened up the field for Honda's reliable, affordable if unsexy lineup. The new subcompact Fit has replaced the Civic at the bottom of its price structure.

The Wall Street Journal thinks that the turnaround at Ford (NYSE: F) may be taking hold. If so, no one on Wall Street knows about it. The auto company's shares trade at $7.65, down from a 52-week high of $8.70. Ford's US market share is only about 15%. It has had double-digit declines in US sales most of the last few months.

The newspaper's reasoning is based on Ford's better earnings and the fact that "the quality ratings of Ford vehicles spiked and now approach the lofty levels of Toyota Motor Corp. That chopped $1 billion off Ford's warranty costs last year."

The theory that the company is doing better is flawed. Ford's quality may be getting better, but the difference in quality among all of the big automakers has shrunk in the last several years. Ford's cars may work better, but many Americans would still rather buy Toyotas (NYSE: TM) and Hondas (NYSE: HMC) because of their reputations as being nearly defect-free.

Some of Ford's new small cars and crossovers may be doing relatively well. But the company makes a great deal of its profit off of its pick-ups and SUVs, especially the F-150 truck. Sales of these vehicles have been dropping as fuel prices rise.

Ford is now also up against higher gas prices and consumers who do not have the money to buy new cars

Things at Ford might get better, but for the most part, that will have to be in the future.

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

The story of the guy in Australia arrested for going on a six-day, 1,988-mile test drive of a new Honda Accord brought back many memories of my own car-buying experiences -- none of them pleasant.

First was the salesman at a nameless Hyundai dealership who in the middle of a test drive asked my wife and I to stop at a convenience store so he could buy a pack of cigarettes. Thank goodness, he didn't smoke the Marlboros while we were driving the SUV he supposedly was trying to sell us, but this idiot soured my family on Hyundais forever. Heck, driving near the Korean-made cars makes me nervous.

During a test-drive of a Nissan, my wife and I heard a rattle. The smooth-talking salesman -- whose twin brother also sells cars -- told us not to worry because "we will get you one without the rattle." My wife and I weren't impressed and NIssan is now also on my family's do-not-drive list. Whenever I see a Nissan on the road, I try to change lanes.

Volkswagen says that by 2010 it can produce 10 million vehicles and pass Toyota (NYSE: TM) and General Motors (NYSE: GM) as the world's largest car company. According to the Sunday Times, "To those who suggest that closing a 3m vehicle gap (Toyota produced 9.4m last year) is a very tall order, company management explains that, in 2006, the number of conventional passenger cars made by Volkswagen and Toyota was fairly similar -- 5.2m for Volkswagen and 5.5m for Toyota -- and that the difference is made up by 4x4s, 'people carriers' and light trucks."

Volkswagen only recently introduced a full range of these multi-purpose vehicles, which will play an important part in its future growth

VW may find that things don't go as planned. As a new entrant to the pick-up and SUV markets, the company will find global competition for not just Toyota and GM, but also Ford (NYSE: F), Nissan, and Honda (NYSE: HMC). Most large countries also have local car manufacturers who may not be anxious to give up a large piece of their business.

While VW may have a chance to get a reasonable piece of the auto sales in huge countries like China, it has almost no market share in the world's largest car-buying nation, the U.S. Taking away business from a desperate company like Ford and a successful company like Toyota may be nearly impossible.

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

February was a tough month in the world of auto sales for both foreign and domestic car manufacturers. Ford Motor (NYSE: F), General Motors Corporation (NYSE: GM) and Toyota Motor Corp. (NYSE: TM) all saw their sales figures shrink during another tough month.

For Ford, it was a really tough month, with the struggling auto maker showing a drop of 7% during the month. Toyota was slightly better, and only witnessed a 3% drop in the month. Toyota was hit hard in its luxury car division, with sales of its highly popular Lexus LS 460 sedan dropping by a startling 25%. Overall, Toyota saw its car sales drop by 4%, with truck sales coming in flat.

For Ford, not only were investors treated to the weak sales figures, but the company also announced that it was going to be cutting back on its shifts in three of its factories, as well as lowering its 2008 production estimates by a pretty hefty 10%. Looking at its individual vehicles lines, Ford saw a 9% drop in its car sales and a 5% shrinkage of truck sales. The drop in demand is leading to the cut backs at its factories, and the factories that will be affected will be plants in Chicago, Louisville, Ky., and Cleveland.

Sometimes executives can put their foot in their mouths, but calling global warming "a crock of s**t," goes beyond that. GM (NYSE: GM)'s Vice Chairman Bob Lutz recently expressed that opinion on his own (not reflective of GM), but it's still being hailed as idiotic on plenty of forums and blog posts from around the world this week.

Lutz had to fire off a blog post of his own to defend his words, but it doesn't matter. He said what he said, and to the ever-growing ecologically astute crowd that's running from GM's gas-hogging SUVs into Toyotas and Hondas, his comments only strengthen what many think of GM: a major contributor to global warming through its huge vehicles for all those Suburban soccer moms and masculine Hummer men.

Now, Lutz did repair his words as best he could in his defense, saying that: "General Motors is dedicated to the removal of cars and trucks from the environmental equation, period. And, believe it or don't: So am I! It's the right thing to do, for us, for you and, yes, for the planet. My goal is to take the automotive industry out of the debate entirely."

It's true that GM has made great strides in trying to revolve its product portfolio around more eco-friendly vehicles, but it still has a long way to go. If it can really make a concept like the Volt work on a mass scale, the recognition GM will receive will go a long way, regardless of lessening dependence on foreign oil or helping curb global warming. Customers will take notice.

Almost every man, woman and child in the U.S. thinks the country is in a recession or heading for one. The head of Honda (NYSE: HMC) disagrees. "It's true that our sales are falling in Florida and California, but we're recording our best-ever sales in the East Coast and Midwest," Chief Executive Officer Takeo Fukui told a news conference, according to Reuters.

Odd as it may seem, he could be right. Honda sells about 1.4 million cars in the U.S., so the company should have a fairly good take on the market. The firm's CEO is making the point that much of America is still in relatively good shape while some of the states hit hardest by the real estate downturn may have "recessions" of their own that may not spread into the economy as a whole.

Honda also has the unique perspective of dealing with the "value" buyer who looks for reasonably priced products. Honda cars have a reputation for fairly low price points, few defects and high mileage.

A recession that only hits certain regions? Let's hope Honda is right.

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