General Motors Corp. (GM) and Ford Motor Co. (F) executives said sales of trucks and SUVs in August again made up a bigger share of total sales as gasoline prices continued to fall from record highs in July.

As gasoline prices topped $4 a gallon this summer, buyers switched to more fuel-efficient cars and shunned the trucks and SUVs that have traditionally driven Detroit’s profits. The industry also has been dragged down by declining retail sales for individual dealerships, tied to the weak economy and soft housing market.

Although General Motors Corp. (GM) and Ford Motor Co. (F) both reported double-digit percentage sales declines - 20% and 27%, respectively - from a year earlier, they said sales revived from July totals.

August was the third month in a row in which trucks and SUVs made up a bigger share of total sales, Mark LaNeve, GM vice president of vehicle sales, service and marketing, said in a conference call.

George Pipas, Ford’s U.S. sales analysis manager, said full-size pickups accounted for 12% of total August sales compared with 9% in May and June and about 11% in July.

Irv Miller, a spokesman for Toyota Motor Corp. (TM), said truck sales climbed slightly in August from July for several reasons, including increased dealer marketing, greater incentives and some pent-up demand from buyers seeking to replace older models.

Overall, Miller said Toyota’s August sales showed “marginal improvement” from July, though they were down 9.4% from a year earlier. Customers continue to seek fuel-efficient cars, and the company is working to boost production of its Corolla and Yaris models, which get 32 and 34 miles per gallon, respectively.

LaNeve said August was GM’s best month of 2008 in total sales, retail sales, fleet sales to rental companies and market share.

He gave some of the credit for the August recovery to the company’s employee- pricing incentive program, which was revived from 2005 to mark GM’s 100th anniversary. He added that the company did almost no leasing in August because of the credit crunch.

Both GM and Ford reported lower inventories at the end of August, while Miller said Toyota’s inventory was “coming down nicely” and 2009 models would be out as planned in November. The number of Tundra pickups has fallen to a 67-day supply from more than 100 days earlier this year, Miller added.

GM’s August inventory was the company’s lowest August level since 1998. The company reported a 22% decline from a year earlier to 736,000 vehicles. The number of pickups in inventory fell to about 200,000 in August from 335,000 in February.

Pipas said Ford’s total inventory fell by 37,000 vehicles to 461,000 at the end of August from a month earlier. The number of cars available was slightly higher while the number of trucks, SUVs, vans and crossovers was 50,000 lower.

He noted that higher prices as well as a limited supply lowered the sales of cars compared with trucks and SUVs, which carried greater incentives for customers.

Both companies also reduced fleet sales to rental companies as a percentage of August sales.

Pipas said fleet sales fell to 21% of total sales in August, compared with 35% of the total year-to-date through the end of July. He now expects fleet sales to be 20% lower for the full year of 2008 compared with 2007.

Pipas added that he expects September sales to be soft.

GM shares climbed 5.8% to $11.27 on Wednesday, while Ford’s rose 1.3% to $ 4.57. Toyota shares rose 1.4% to $90.04.

All three of Detroit’s old guard carmakers have struggled badly in the marketplace, particularly since rising petrol prices sparked a flight by US consumers away from the hefty, inefficient and profitable SUVs, pickup trucks and minivans upon which the companies have focused their marketing and product development since the 1990s.

But thanks largely to crude oil prices tumbling back towards $US100 a barrel, shares in GM have rebounded 21 per cent since touching a 54-year low in July, shortly before the firm’s latest staggering quarterly loss.

Ford shares have also gained ground in the past few days, and the US business media is suddenly full of stories about a resurgence of the car (and airline) firms thanks to cheaper oil.

If only it were that simple.

In reality, fluctuations in the stock prices for GM and Ford (Chrysler is now privately held, 80 per cent by buyout group Cerberus) are not much different to the recent ups and downs in the shares of Fannie Mae and Freddie Mac — the result of speculative players taking short-term punts on the latest gossip against a backdrop where investors with longer horizons believe straight-up equity in these firms is essentially worthless, given the probability of bankruptcy or an extremely dilutive capital raising.

Even investor enthusiasm earlier this year for GM’s preferred stock (whose holders in theory could wind up owning the company if it went bankrupt — but not too bankrupt) has faded away.

And the cost of buying default protection on corporate bonds issued by the carmakers has soared in the past few weeks, and is currently priced at a level that indicates the credit markets believe there is an 85 per cent probability of both GM and Ford defaulting at some point in the next five years.

The market scepticism is not surprising. Aggregate market share for the not-so-big three — GM, Ford and Chrysler — has been heading in the wrong direction for a decade, to the point where they accounted for only 43 per cent of US car and truck sales in July.

But if the figures are broken down further to focus on just passenger cars, the only part of the US market that is showing signs of life, their share drops to 32 per cent.

Strip out heavily discounted volume deals with fleets, such as car rental companies, and Detroit now only produces about one in four US cars sold to households.

Given the stampede among US consumers away from trucks and other bigger vehicles and towards fuel-efficient and hybrid smaller cars (which the big three until recently claimed were uneconomic to build in the US), the only part of the market that is growing is the part where the three are pitifully weak.

While GM, in particular, has won plaudits for recently reshaping its product line and finally delivering cars that are attractive and well enough built to attract mainstream US customers, there is no evidence as yet that it can translate this into either a reversal of market share losses or more sustainable financial performance.

In the meantime the firm is attempting to raise cash by selling its Hummer division, which makes some of the least fuel-efficient (but most profitable) vehicles sold in the US.

Similarly, Chrysler, which has released only limited financial information since it went private last year, is attempting to sell its Viper label, another absurdly gas-guzzling marque.

For its part, Ford has already divested its Aston Martin, Jaguar and Land Rover brands.

Despite plans at all three firms for asset sales, job cuts and plant closures, most shareholders and bondholders are left wondering how long it will be before existing reserves of cash run out, given the recent pace of losses and whether they can raise any more.

The situation is most obviously dire at General Motors, which in the six quarters since the start of 2007 has lost $US57.5 billion. That flood of red ink more or less wipes out the aggregate $US59.5 billion GM earned during its previous 22 years of operation between 1984 and 2006.

Meanwhile, Ford has lost a total of $US21 billion since the start of 2006, with a larger than anticipated loss in the latest quarter helping slash its stock price to the lowest level since the mid-1980s.

For investors, the magnitude of these losses over such a short period raises an obvious concern: is the US car industry going the way of the US airline industry, which over its history has lost more money than it has made?

Adding to anxiety is the fact that bankruptcy is the only conceivable way out of the key financial problem that GM, Ford and Chrysler confront — their vast accumulated legacy liabilities for the pensions and health insurance of retired workers, which add roughly $US1500 ($1800) to the cost of each vehicle.

While nothing would make the Detroit trio happier than the chance to shove their obligations on to US taxpayers, the path to a point when that could actually happen is not going to make any investor rich.

In the meantime, there are other ways to beg for help from Washington. It’s not just Australian carmakers that are attempting to use climate change as an excuse to gouge more money out of taxpayers. GM, Ford, Chrysler and several US car-parts makers are demanding $US50 billion in federally subsidised loans to “develop and build more fuel-efficient vehicles”.

Half of that sum has already been approved, albeit with conditions that prevent the car firms from using the funds as freely as they might wish. That’s not exactly turning off life support — but don’t expect it to spark any sustained recovery.