Chrysler to be Ruled by Fiat?

So, what do you folks think about the various plans for the American auto industry? Today's news says that Chrysler has reached a deal with the UAW and is nearing a deal with Fiat, while meanwhile GM will undergo a major restructuring where it'll be mostly owned by the UAW and the government, phase out the Pontiac brand, and sell or phase out Saturn, Hummer, and Saab.

I don't make any pretense about having any kind of expertise on this subject, just a few thoughts to bounce off of the rest of you to get your input. If a company (or bank) is too big to fail, they're too big to exist. Split them up instead of merging them. GM currently sells cars in the U.S. under the Chevrolet, Pontiac, Buick, Cadillac, GMC, Saturn, Hummer, and Saab marques, while internationally they also sell as Vauxhall, Opel, Daewoo, and Holden. That's way too many and just screams "bloat" to me. It seems to me that we'd have a healthier manufacturing sector if we had many smaller auto manufacturers rather than three big ones. Here's why:

1. Fewer layers of management between the top and the design, sales, and labor side would make for more responsive companies,
2. More companies in the market would allow for more real specialization toward different niches, and more competition between companies,
3. Failure by one company would not create such an industrywide collapse, and
4. Barriers to entry by start-up companies would be lower.

Another point is that if the federal government is to be a big owner of GM, then GM needs to act in the taxpayers' interests. And part of that would be that GM needs to prioritize making cars that aren't as bad for the environment, ones that use less gas and/or alternative energy sources, create fewer harmful emissions, and are made from raw materials extracted using more environmentally sound methods. And hey, how about retooling some of the car-building factories and retraining some of the car-building workers to making buses or mass-transit systems?