The unparalleled The Truth About Cars has a great post about the consequences when government and industry clash. Here's "General Motors Zombie Watch – Cadillac must die."
There’s only way for Cadillac to recapture faded glory. Cut the crap and build the best. The best no-holds-barred luxury cars. Stylish, no excuses vehicles, meticulously engineered, rock solid. And then they have to create a dealer network that kisses customers’ asses like none before.That's correct: the feds want Government Motors to make politically-correct hybrids like the Chevy Volt but they also want the auto companies to make a profit and get out of debt. These are conflicting goals. Auto companies make almost all their money on large trucks and SUVs.
Never. Gonna. Happen.
Even if we assume Cadillac’s rebirth could happen-that GM could find the courage to cull Caddy’s cancerous cars and trucks, that it could summon the creative and financial resources needed to be the best of the best-the U.S. government can’t let it happen. It’s the wrong image.
I might have told this story before but many years ago I visited a major auto company and there was a Smart Car sitting in an atrium. The engineer I was speaking with dismissed it thusly: "We don't make any money on those. The only reason we build them is to meet fleet milage standards." So there you go: those tiny cars exist only to meet government rules while the big cars generate profit.