Ooof! May sales were like a punch in the stomach, especially to the Detroit Three. It's been nearly three decades since we've seen their sales collapse so dramatically.
Last month the annualized sales rate of the American market, including all automakers, fell to only 14.2 million units. That means if sales keep on going like they did in May, the industry will only sell 14.2 million units this year. Remember, as recently as 2006 this industry sold over 17 million.

That drop off of nearly 3 million vehicles translates into the equivalent loss of:
12 assembly plants
6 engine plants
6 transmission plants
5 stamping plants
Dozens and dozens of component plants

That also translates into an estimated loss of about 65,000 jobs. In only two years time!

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

And it's going to get worse. I believe the rate will drop under 14 million units when they close the books on June sales. That's because the inventory of small cars was cleaned out last month.

Hybrid sales really prove this point. Last month sales of all hybrids fell 28%, even though the overall market only fell 14%. Sales of the Toyota Prius were down a whopping 40%! The reason they're down is that you just can't buy them. There are virtually no more hybrids in inventory, thanks to a global shortage of nickel-metal hydride batteries.

Even though automakers are scrambling to boost small car production, that will take months to get going. And in any case, an increase in small car production will not be enough to offset the drop in sales of trucks and SUVs.

As a result we're seeing a realignment in the standings. As reported earlier on Autoblog, the "Big Three" have a combined market share of 45%, less than half the market. More specifically, last month Honda sold more vehicles than Chrysler. I guess it's safe to say the $2.99 gas-card pitch isn't working. It seems pretty likely Honda will emerge as the fourth largest automaker in America by the end of the year.

And Toyota came within 11,000 vehicles of catching GM last month. I believe it's only a matter of time until Toyota becomes the Number One automaker in the American market. If not this year, probably next.

The market is changing so fast it's enough to take your breath away. For decades, the best selling vehicle in the U.S. has been the Ford F-series, closely followed by the Chevrolet Silverado. But in May they slipped to 5th and 6th, respectively. Now topping the sales charts are, in order, the Honda Civic, Toyota Corolla/Matrix, Toyota Camry and Honda Accord.

Wall Street is once again raising the specter of bankruptcy for General Motors. It's all about cash flow. With such a precipitous drop in sales and production they're worried GM is running out of money. I wouldn't be at all surprised to see GM go back to the UAW asking for more concessions, probably a postponement of the $35 billion it has to pour into the voluntary employees' beneficiary association (VEBA) that was to pay for the health care of its UAW employees.

It's a pretty grim picture. And it certainly is going to get worse.

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