Many of them did go bankrupt. Car companies have been going under for years, even after the Depression. Do you remember Hudson, Studebaker, Kaiser, Nash, Willys? The Big Three were the ones who survived, and they had the field to themselves until Europeans (particularly Volkswagen) and then the Japanese challenged them with high quality, economical cars that were cheap, reliable, and fun to drive.

The American car industry got into trouble because it abandoned that entire sector of the market and concentrated on where it thought the profits were. And it competed on the basis of what they were marketing to the consumer, not what the consumer was telling them in ever-increasing numbers they wanted. The consumer wanted quality, they got chrome and horsepower, instead. Yeah, the revisionists will try to tell you it was all the fault of government regulation, but the same regulations applied to Datsuns as well as Dodges.

THe marketing and customer inertia worked until high fuel prices, coinciding with a perceived drop in American car quality compared to the Japanese, suddenly caught up with them. By then, the Japanese had built a sales and service infrastructure that could compete with the Big Three at every level, even the big luxury car market.