A comment on Seth Godin's blog entry on what to do about Detroit...
I think the reverse will probably happen - GM and Chrysler will merge and weather the storm against the Japanese and European car makers. There is tons of innovation already in the marketplace -- the problem really is that people aren't willing to pay premiums any more for crappy product. Splitting up into hundreds of brands will only confuse an already confused market place.
You don't get innovation for free -- Blueray players are still $299 a pop, although they were thousands of dollars a few years ago.
The dealer part of Seth's argument, though, is bang on -- you should be able to chip away quite a bit of the hassle of buying a car by shopping online, getting a great deal and then picking up your vehicle at a local lot, AutoShare style. Financing should be doable this way too. There are too many middle men in the car industry, and it's about time it became disintermediated piece by piece.
The Detroit car makers could do themselves a favour by revolutionizing their sales channels. That could do wonders for the price of cars.
One approach to making this happen is to split the R&D and Sales/Marketing functions of the companies.
Leave R&D from GM, Chrysler and Ford as separate companies, and create 1 corresponding sales/marketing organization that sells cars in a modern way on behalf of all the car companies. I bet if you chopped off the sales/marketing side of the big 3 you'd find that they'd be cash flow positive all of the sudden. This is the dirty little secret of the Big 3 -- it's not about how much the line workers make -- it's about how awful the sales and marketing strategies haven't evolved since the Model T.
UPDATE: Lewis Green offers this little liability tidbit to consider. Obviously this has to be thought through before dealers start being cut off at the knees. I think natural evolution will make the dealers close on their own without forcing them to be shut down.
"General Motors, for example, currently manufactures and markets automobiles under eight brands in the U.S., including Chevrolet, Saturn, Pontiac, and Buick, in a market where few customers perceive any significant difference among them. When the company did shut down one under-performing and duplicative brand (Oldsmobile) in 2004, it had to pay dealerships over $1 billion in "financial assistance" to avoid lawsuits, and four years later, it is still embroiled in litigation from former Oldsmobile dealers who declined to accept assistance or settle their claims. Their antiquated dealership structures also prevent the Big Three from instituting modern and more flexible inventory-management practices and selling cars over the Internet."