There are a few mistakes everyone makes when looking at the automotive industry:
1) The big three are very differant companies from each other. First, Ford -- they have reduced costs in the US substantially, and make money in the rest of the world. Mullaly is going in the right direction integrating Ford globally and they have great, global product coming out over the next couple years. Ford is reducing costs, inputting flexability, and getting more efficient. GM -- the same management level at GM makes 40% more than the same level at Ford. GM is over staffed and inefficient. In order to stay alive they need to reduce costs AND get more effcient, both of which GM is not effectively planning. Also, GM has cut many future vehicle programs. Chrysler is a mess. Daimler took many ofl the good processes and people, and that wasn't much. Chrysler has lower costs, but very low quality and not a very effective plan to survive. They are cooked no matter what.
2) Toyota and Honda are heavily subsidized by the Japanese government. Also, in the US companies are tasked with funding retirees (company paid pensions), while in Japan (and most other countrys building cars) the governement (basically) takes care of the aging. This is a huge advantage, especially if the our companies are over 100 years old. We, the US of A, have also heavily subsidized Honda and Toyota at the state level -- Alabama gave Toyota land and built buildings and roads, while erasing tax burden (which is why Alabama is one of the least publically educated states).
3) Bankruptcy would erase the US industry. Think about it -- there are thousands of automotive parts supplliers. It takes over 4,000 parts to build a car, and 8,000 to service that car (don't forget, they don't just build a vehicle and forget it, that vehicle is serviced up to 20 years after production). GM has already put substantial stress on their suppliers, forcing many to go bankrupt. Most of these suppliers supply the other compnaies and it costs hundreds of millions to move tooling or re-tool. If GM files bankruptcy, the supply base (including those for Toyota and honda, and that's why they are in the background hoping for some $ to GM) will go under. This will put such financial strain on everyone else that they too will file for bankruptcy. The cost to fix all this would be substantially more than fixing it before bankrupcty (now, granted, we need to fix it correctly). Good luck getting your 1998 Honda Civic fixed, let alone your 2001 Focus, and forget your Jeep, if GM files bancruptcy.
Of course, there's much more, but I don't want to bore you to death.
