Reporting on the auto industry can be a bit difficult, these days, certainly if you're hoping to find something good to say. And the latest news is no exception.

Wrapping up the second quarter, General Motors announced a whopping $15.5 billion loss, the third-worst in its history, and nearly double the record loss reported by Ford Motor Co. barely a week before. Chrysler did announce it had found a way to set aside $1.1 billion during the first half of 2008, but that's about the only thing good the automotive arm of Cerberus Capital Management seems to have to talk about these days.

And to make sure prospects don't look any better for the months to come, industry sales numbers showed that the market is, if anything, getting worse, with automakers large and small collectively reporting what would, on an annualized basis, come in at barely 13 million cars, trucks, and crossovers. That's down from an industry peak earlier in the decade of more than 17 million.

Chrysler, in fact, posted the worst downturn of any of the major makers, a 28.8 percent decline for July, with GM close behind, at a 26.1 downturn. Ford was off 14.7 percent, but there was something positive to note there, with the ailing makers passenger car sales actually rising by 1.9 percent. The big downturn - no surprise - across the industry is on the light truck side, where even Toyota reported a 27.1 percent drop, compared to year-earlier sales of vehicles like the Tundra pickup and Land Cruiser SUV.

But even Honda, which has seemingly defied gravity in recent months, proved that Newton was right. The Japanese maker reported an overall 1.6 percent decline.

The one positive surprise? Nissan delivering an overall 8.5 percent increase in July sales, despite its continuing decline on the light truck side. High-mileage small cars, such as the Versa, have helped the Japanese marque gain traction.

And that's what analysts are hoping can put a bit of momentum back into the industry, as makers race to expand production of products like Versa, Honda's Fit, and Toyota's Yaris. But even though domestic manufacturers are shutting truck plants as quickly as possible and converting many to handle small passenger cars, the changeover won't be easy - or quick. The first American version of Ford's new Fiesta, for example, won't roll out a former F-Series plant in Mexico until the 2010 model year.

A slight reprieve in fuel prices could help August's numbers, some analysts believe. But few expect a resurgence in the truck market. And the overall slump in the U.S. economy, with surveys showing consumers expecting even worse, isn't going to help the auto industry.

Indeed, the lending crisis is actually worsening things for the auto industry. Automotive finance subsidiaries and traditional lenders alike are tightening credit and, in many cases, curbing or eliminating entirely the leasing programs that, in recent years, helped get millions of motorists out of used vehicles and into new ones.

"I'm really worried about keeping my doors open," one Detroit-area Lincoln Mercury dealer told me last week. About 80 percent of his business is leasing, noted the retailer, who asked not to be named. And if he can't offer those low-cost deals anymore, he doesn't expect to convert many of his struggling blue-collar customers to a traditional sale.

The leasing cutback could be felt across the industry. For most luxury marques, leasing accounts for 70-plus percent of their business. Yes, makers like Lexus and Mercedes-Benz have more affluent customers, but many of those are also stretching their budgets to stay in the luxury market. If makers are forced to retune leases to reflect financial realities, some products could see huge price jumps. And that could lead many potential customers - especially those coming back for new leases - to walk away.

There's clearly light at the end of the tunnel. But right now, nobody's quite sure when they're going to get near enough to the end of this downturn to see it.

General Motors posted a massive $15.5 billion second-quarter loss, a widening deficit that underscored the mounting problems facing the giant automaker, Detroit, and the auto industry in general.

The huge loss, one of the worst in industry history, and nearly double the record deficit posted by Ford, last month, was the result of a variety of problems: labor unrest, the collapse of the light truck market, the slump in housing, record fuel prices and the overall slide in new vehicle sales.

The big loss included $9.1 billion in one-time charges, which included $3.3 billion to buy out 19,000 U.S. workers. Another $1.3 billion was written off because of the declining value of the trucks held in the portfolio of General Motors Acceptance Corp., GM’s captive finance subsidiary – which it owns in partnership with the private equity fund, Cerberus Capital Management.

The huge problems facing GM – which slipped to number two in the global sales sweepstakes, behind Toyota, during the second quarter – forced the automaker to announce a new restructuring plan, last month, that will lead to billions of dollars in cost-cutting. Among the targets: a reduction of 5,000 salaried jobs in the months to come.

TheCarConnection.com will have more to come later today.

The cuts keep coming, and anyone collecting a check from Detroit's Big Three has to be wondering for how much longer.

General Motors has confirmed that the 15 percent cut in salaried "costs" it announced earlier this month will result in the loss of 5,000 white-collar jobs. Look for the bulk of those cuts to occur in the U.S., though some could be trimmed at overseas operations, as well.

It's hard to keep track of all the players without a scorecard, it seems. So, we've added it all up, and Detroit makers plan to cut 10,000 salaried staff, as part of their latest round of desperation cost-cutting measures.

But that's not the end of the bad news. Chrysler has announced it is indefinitely suspending tuition reimbursement for virtually all of its salaried employees, in the U.S., Canada, and Mexico. Ford took similar steps in June. GM will continue its tuition assistance program, but no one is saying for how much longer.

Look for still more bad news from the domestic giant on Friday, when it releases what, by all expectations, will be a devastatingly bad second-quarter earnings report.

If something seems too good to be true…maybe it is. Yet for the last two decades, automakers have swallowed a bit of pixie dust (or was that electric Kool-Aid?) and convinced themselves the lease is the industry’s best friend.

There seemed to be plenty of reasons why automakers and auto buyers alike loved leasing. You, as a car-buying consumer, might have used a lease to buy a fully loaded luxury SUV on a monthly budget more suited to a mainstream sedan. Perhaps you got your teenage child a brand-new car, instead of a rusty heap from the corner used car lot.

Automakers not only got buyers who might not have been able to afford a new car, but millions more motorists moved up-market. And, contended the early lease proponents, brand loyalty would surge, as well. Why? Because a manufacturer would know precisely when a customer would be required to turn in their vehicle, explained former Ford marketing czar Bob Rewey. And if you knew that, you could ramp up your marketing efforts, targeting a specific customer more effectively than ever before.

So it worked – in theory. But there was a catch.

Leasing has actually been around for decades. But in the past, it was “open ended.” That meant that a consumer never really knew what the final costs of the deal might be. Let’s say you leased a Ford Explorer and it’s come time to turn it in. With an open-ended lease, if the value of that vehicle has dropped since the deal was written, you might have cover the gap – much as you’d lose out if you bought a car that dropped more than anticipated when you traded in.

With today’s closed-end leases, however, the manufacturer assumes that risk. And knowingly so. In recent years, automakers have taken a “let’s pretend” approach to residual value, the technical term for what a vehicle is worth at the end of the lease. Sometimes they consciously inflate that number, and count it as an incentive – sort of the lease alternative to a rebate. Other times they simply ignore facts and come up with a number that they should know better than writing into a contract.

Either way, the lease bubble has burst. The residuals forecast for SUVs and light trucks, in particular, are coming in nowhere near what was predicted just a couple years ago. Add a rising number of defaults, and you have a full-fledged mess, one that will cost the industry billions, considering that leases currently account for 20 percent of new-vehicle business among Detroit Big Three. (And for some import luxury marques, it’s substantially higher.)

If you thought the industry was worried about the general downturn in the U.S. auto market, add in the leasing situation and you’re starting to see signs of panic.

This past week, Chrysler announced that its captive financial subsidiary will halt automotive leasing. Now, Ford and General Motors plan to sharply trim back their leasing programs. And a number of banks, including J.P. Morgan Chase’s Chase Auto Finance unit, are scaling back or are cutting leasing out, as well.

Who loses? That’s a good question. Certainly, there’ll be a lot of consumers forced to downsize their aspirations. And plenty of others might be driven out of the new vehicle market entirely. For manufacturers, that’s lost business and lowered expectations, as it’s another reason why the ongoing market slump might continue.

To some, it might seem almost anticlimactic. Maybe it should be to all of us. But surprise or not, General Motors, after suffering a 5 percent dip in its global volume, saw its sales for the first half of 2008 fall behind those of its archrival, Toyota Motor Co.

The two have been locked in a heated race for the last two years - GM beat out Toyota in 2007 by just 3,100 sales - but this year's sharp downturn in the U.S. market, particularly in the light truck segment, finally tipped the scales in favor of the Japanese giant.

From January through June, Toyota moved 4.8 million cars, trucks, and crossovers worldwide, compared with 4.54 million for the troubled U.S. maker - which only last week announced the latest in a series of sharp cutbacks that includes still more reductions in pickup and SUV production.

It wasn't all bad for GM. The automaker posted a strong 10 percent growth in overseas sales. Two of its traditionally domestic brands, Chevrolet and Cadillac, both did well abroad, posting double-digit gains.

But there's that troubled U.S. market, where overall industry sales plunged, last month, to their lowest levels in more than a decade, coming in at an anemic, annualized rate of 13.6 million, compared with the 17-million-plus levels of the early part of this decade.

And there are few signs things are going to get better anytime soon, lamented GM's chief sales analyst, Mike DiGiovanni. "Early indications" for July, he warned, suggest "it's going to be another challenging month."

GM isn't the only one suffering, however. Even Toyota saw a 7 percent decline in U.S. sales during the first half of this year, but it more than made up for that elsewhere, especially in emerging markets like China.