How About Some Creative Destruction?
Here's the problem. Automobile manufacturers control the pace of innovation because other than regulatory issues and whether the market will buy their products, they have the final say on everything in between: Engineering, manufacturing, distribution - the whole ball of wax.
What's more, senior management makes the decisions. Everything is funneled through the auto companies, and all the major decisions are funneled through to top management. If the people at the top are not good managers, and history indicates they haven't fared very well, then it doesn't matter how good their suppliers, their partners, and their employees are. Stuff just isn't going to get done right. And everyone down the line is affected, not just in those companies but among a much larger ecosystem of employee families, suppliers, dealers, and communities across the country.
The best way forward is to break GM and Chrysler up or let them fail. Remove the gatekeepers. The sum of the parts is worth more than the whole. Invest in new technologies and processes being developed by new companies.
Let investment flow to a more granular level. Rather than spending tens of billions of dollars trying to prolong the inevitable collapse, it would be more productive to create a new marketplace or exchange that would enable investors to put money into emerging green and safety concepts and technologies, lower the barriers to entry, and bring in new blood to the industry.
If cars were developed from more common building blocks rather than blocks unique to one company, ultimately there would be more and better vehicles to choose from, produced by more competitive companies, and greatly reduce the likelihood of having to rescue another one that is too big to fail.