During the last decade, Ford, General Motors, Daimler and Volkswagen spent billions of dollars on investments in other auto companies, usually those in need or soon to be in need of a rescue. We’ve written about the folly of those acquisitions in the past. None has produced any meaningful financial contribution and none has provided any brand extension to improve the perception or performance of the acquirer. All have drained capital and management time that should have been spent fixing core problems.

Ford’s second quarter produced lower than expected results at the Premier Automotive Group. I thought this group was projected to generate a huge chunk of Ford’s future earnings? GM has written off its $2 billion in Fiat and has yet to see any profits after 14 years of controlling Saab. Now it’s restructuring GM Europe again. DaimlerChrysler finally abandoned Mistubishi though not without a fight from J?rgen Schremp, its Teflon-coated boss who likes to throw good money after bad.

Now comes word that Volkswagen is quickly sliding into a financial hole, which the hapless Mr. Pischetschrieder will be blamed for even though the author of the disaster is his predecessor, the mercurial Ferdinand Piech. VW recently announced that its 2004 “profits” would be sharply lower than expected even though it has been aggressively reducing costs. VW’s problems include lousy sales and falling market share in Europe, in part due to a predictable increase in Japanese competition, an excursion into luxury cars which no one wants (didn’t Piech realize that Volkswagen translates into People’s Car) and an assortment of acquisitions which have cost the company plenty and yielded nothing. VW can’t even make money in China, the hottest car market on the planet, because its models are as stale as they are in the United States where VW dealers are going from feast to famine again.

Once again as I read about VW’s cost cutting plans and its intentions to consolidate computer centers and reduce engine variation, I am astonished that this is still work to be done. Haven’t we been in a bloody global battlefield for 25 years with the Asians steadily gaining market share everywhere? Wasn’t the landmark work of MIT that detailed the sources of Japanese competitive advantage published in the 1980s? I know VW representatives were at the MIT meetings. I remember seeing them there so they had to have heard what I heard.

The near-luxury and luxury brands have always had a special allure to mass-market vehicle assemblers. Auto companies saw segments with no incentives, credit-worth customers who traded in their cars every few years and brands where price reflected the mystique and bore no relation to costs, as in the case of the Jimmy Choo shoes or Louis Vuitton handbags in my closet.

But now every company that talked itself into acquiring luxury and niche brands should be re-evaluating those decisions. The acquisitions have not solved corporate competitive problems while siphoning off resources that were needed to fix the core business. It’s time to let some brands or divisions go off into the sunset. The world doesn’t need a Bugatti Veyron or the VW Phaeton. If Bentley, Jaguar, Saab and Land Rover can’t support themselves, then their lifelines need to be cut. Ford has starved Mercury and Lincoln of competitive cars while trying to fix Jaguar and the other brands in its stable. GM is struggling in Europe and losing market share in North America. It lacks a competitive 6-cylinder engine and lacks the know-how to produce modern diesel engines for its overseas customers. Daimler has allowed Mercedes quality to erode while it is being outsold by BMW. VW’s acquisition spree in the 1990s had no underlying rationale that made sense.

The global excess-capacity time bomb is only getting bigger. Now is the time to make really hard decisions about what should stay and what should be sacrificed. If the right decisions aren’t made now then it might be the entire company that is sacrificed later.

Maryann Keller is a veteran auto industry analyst and author of the books “Rude Awakening: The Rise, Fall and Struggle to Recover at General Motors” and “Collision: GM, Toyota and Volkswagen and the Race to Own the 21st Century.”