Fixing the US auto industry requires two changes: wiping out most of the cost burdens that have weighed down Detroit for decades, and managing the big three in a more clear-sighted and unsentimental way than in the past.

The decision by the US government to place Chrysler, and perhaps General Motors, into Chapter 11 bankruptcy is a tougher approach than some expected of a Democratic president beholden to the auto unions. But there are mixed signals over their long-term prospects.