Yup, large automakers bought up a lot of rail lines, especially local inter- and intracities, and tore out the tracks as part of the highway program.

Not quite! Railroads were built using land grants, so they'd literally build cities along their lines to sell the real estate they got for free at inflated prices. Privately owned and maintained right of way is unsustainably expensive, so once the land grants ran out railroads had to continuously scramble to find a way to operate profitably. At the second half of the 19th century they began consolidating and building trunk lines for increasingly massive locomotives, in the mid 20th century they began using diesels to further reduce costs and in the late 20th century they found technologies and advanced freight routing techniques to further squeeze costs. Now in the 21st century they haven't yet found the next way to remain profitable so we shall see what they do.

The auto industry spent until about the end of the Great Depression selling farmers and ruralites on cars, partnering with cycling advocacy groups to lobby governments to pave existing public roads (passing the infrastructure cost to the government instead of themselves). Then as they sold more vehicles they turned their customers into their lobbyists through auto clubs like the AAA to encourage better infrastructure for cars in cities, and by the time the Federal Highway Act was passed everyone involved had already grown up with automobiles everywhere on publicly funded roads.

There were a handful of documented instances of the auto industry buying and mismanaging interurban and trolley routes, but trolleys were already on the decline before the auto industry even got their feet under them because they also were built via land grants and real estate speculation the exact same way that railroads were built! This stopped being viable not long after it stopped being viable for the railroads. Trolley services were built to share the streets with pedestrians, cyclists and horse carriages, and the streets were simply not built to separate the incompatible traffic of automobiles and trolleys, so once automobiles outnumbered trolleys the traffic became too much to be able to run reliable trolley service and the death spiral was unstoppable

The final nail in the coffin for rail passenger service was in 1968 when the US Postal Service ended mail contracts with the railroads, daily passenger service to every city ceased to be financially viable. Before that point, railroads would run at least one train a day with an RPO, and if they're already running a crew out there why not also bring some freight and passengers along too?

Then of course in the 1970s the ill-fated Penn Central collapsed in the second largest bankruptcy in US history (and nearly collapsed the entire North American rail system in the process!) which is where Conrail and Amtrak came in, federally owned entities to keep vital rail service operating. Conrail was eventually sold off into what's now CSX and Norfolk Southern and Amtrak remains, constantly kneecapped by competing private interests (like remember that time Amtrak ran profitable freight service? Yeah the private railroads really didn't like being outshined by Amtrak!)