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The big three do sell a lot of cars. The problem is that their companies are so bloated and ran so poorly that they make little or nothing on those cars. If they can fix that they will be profitable and can survive, if they can't they won't. It really is that simple.
To me the main reason for this is the SUV. They basically put all their eggs in the "big car" basket and convinced everyone they needed an SUV. And they started selling like mad. The world followed. Every car maker these days seems to have an SUV including Porsche, BMW and Mercedes. Then gas nearly tripled in price and all of a sudden those gas guzzling SUVs were not so attractive and people stopped buying them. It didn't happen overnight, but as people got to that point where they were ready to get a new car they started buying cheaper, smaller and more economical cars. The big three were dependent on the SUV to make profit and now the SUV wasn't selling as well. You add that in with poor managment and huge union contracts and it was a recipe for disaster.
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