American politicians trying to understand the reasons behind the collapse of Detroit's "Big Three" automakers could do worse than take a drive along the freeway in New Jersey. Just a few minutes from the bright lights of Manhattan, under the Hudson River via the Holland Tunnel, there are acres of lots overflowing with brand new American cars.

All the famous marques can be found in these elephant graveyards of metal - Pontiacs, Buicks, Chevys, Chryslers and Fords. These unwanted autos, and the struggling dealers who stock them, will still be there whether Congress buckles to the carmakers' pleas for $34 billion (£23.1 billion) of aid or not.

American car sales plummeted in November to their lowest in a quarter of a century. General Motors' sales tumbled 41.3%, Ford's fell 30.5%, and Chrysler's were off 47.1%.

There are almost 21,000 new car dealerships in the US, the majority of which are tied to the Big Three. GM alone has nearly 7000 competing with each other at close quarters all over the country. Foreign car dealerships, by contrast, are much thinner on the ground.

This massive glut of dealerships is a real problem for the Big Three, just as much of a hindrance to their recovery as costly union contracts and production problems. GM knows this and has acknowledged that it would have to trim its own network by as many as 1800 dealerships to stand a chance of survival. But most are protected by strong state franchise laws that simply do not allow closure without a hefty payment to the franchisee. Axeing its national network of Oldsmobile dealerships cost GM more than $2 billion, for example.

Last week Chrysler said it needed $7 billion by the end of the year just to keep running. GM asked for $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit. Ford is in much better health, it seems, and needs a mere $9 billion "standby line of credit".

To get the money, the Big Three were forced by the politicians to craft detailed business plans that promised revamped factories making environmentally friendly cars, a new union deal to lower labour costs, and a stake in the companies for government.

The CEOs, some of whom were pilloried for flying to Washington by private jet for the crisis talks, even agreed to a $1-a-year salary in exchange for financial aid.

But what good is any of this if The Big Three cannot sell cars? The only way the dealership problem - and many of the carmakers' other ills - can be addressed quickly and affordably is through the bankruptcy courts.

Up to now, neither the Big Three nor Congress have been willing to consider such a drastic move as they fear a damaging ripple effect through the wider economy that will cost millions of jobs.

The latest idea being discussed is reviving aborted merger talks between Chrysler and GM. But New York Democratic Senator Charles Schumer is typical of many when he said: "I don't trust the car companies' leadership."

A small group of US politicians have asked restructuring experts if a pre-arranged bankruptcy - negotiated with workers, creditors and lenders - could be used to reorganise the Big Three without liquidation. But such a solution would be almost impossible to implement.

An alternative, and workable, plan would be to allow Chrysler to fail. The company is owned by Cerberus, a private-equity company that knows the risks inherent in a corporate turn-around, and besides, Chrysler has already been bailed out by the US government once before. Its time is up.

GM should seek the safe haven of Chapter 11 bankruptcy so it could quickly reorganise production, renegotiate union contracts and axe at least half of its dealership network.

Ford is in more robust shape and has a leaner dealership network already, but would still benefit from the union contract reworked by GM.

This nuclear solution would level the playing field between the outdated and outclassed Big Three and more successful foreign rivals like Toyota.

America's carmakers have been treated as a special political case from the rest of industry for far too long.

If the problems from the factory floor to the salesroom had been properly addressed 25 years ago - as they were in the steel industry - the American people would not be facing today the Hobson's choice of a $34 billion bailout bill or massive unemployment.