The world's second-largest automaker, Ford Motor Co. (NYSE:F), couldn't get its engine revving in the second quarter, and reported results best described as "lame." Thirty-five billion in automotive sales resulted in net income of just $3 million.

Before you cry Mr. Ford a river, the quarter was saved by Ford Credit division, which managed $401 million in net income -- nearly all of the company's $0.22 earnings per share (down from $570 million, or $0.29 per share, last year). Second-quarter revenue skidded to $40.7 billion, off from $42.2 billion in the same quarter last year.

Ford blamed its ongoing slowdown on the poor economy. This may be partially true, but a glance at competitors tells a different story. Ford saw flat sales in June, but new vehicle sales were up 4.1% industry-wide, with DaimlerChrysler (NYSE:DCX) increasing sales 7%; General Motors (NYSE:GM), 1.3%; and the Japanese automakers cleaning up. Sales at Honda (NYSE:HMC) climbed 8.7%; Mitsubishi, 9.6%; Toyota (NYSE:TM), 10.9%; and Nissan's (NASDAQ:NSANY) sales rocketed 21.5%.

The only context in which Ford's results look somewhat "OK" is when you consider that total industry sales in the first half 2003 declined 2% compared to last year. So, Ford isn't the only one sucking wind. In fact, all the U.S. automakers need a serious tune-up of their business plans.

Since September 2001, the auto industry has relied on oversized rebates and 0% financing to drive sales. According to CNW Market Research and Motor Trend, in June this year, sales incentives reached a record $4,463 per vehicle. These offers kill automakers' single-digit profit margins, knocking them from 4% or 3% to 1% or lower.

And now the industry can't take away incentives without serious repercussions. Incentives have become a primary sales motivator, to the point that many analysts no longer consider sales volume a meaningful barometer. It's estimated that without incentives, auto sales would drop from 16.4 million units this year to around 15 million, a level not seen since 1994.

This Catch-22 leaves the debt-heavy automakers with one primary option: Keep incentives and cut costs. Ford plans to slice $2.5 billion from the budget this year, saying it is "looking everywhere" for expense reductions. ("Is this dashboard cardboard?") Even with record cuts, the company expects to lose $0.15 per share in the third quarter. However, Ford still hopes to earn $0.70 per share for the year, which would be an increase from $0.47 earned in 2002.

The bottom line: Even after the economy turns up, automakers will remain extremely leveraged, cost-heavy, and always under the gun of competition. Most investors are better off elsewhere. In other words, consider a detour.

Jeff Fischer contributed to this Take. A Motley Fool Take is a concise look at news, with key points you won't see elsewhere, and -- when possible -- an opinion on what matters to us: Is it a good investment?