But all that assumes that for some unexplained reason the demand for cars would just dry up.
The reason demand suddenly dried up is explained perfectly well - because most people buy cars on credit, and there was a run on the banks (mostly by each other) and thus no money to lend for buying cars. It's the same reason other companies would not have had the capital to step up and take GM's place.
This experiment has been done before, in the 1930s. Sure, the economy recovered eventually, but the cost was catastrophic - not "just" the human cost, but the entirely avoidable decade-long reduction in GDP. We just re-ran the experiment with a different intervention and a much better outcome, except it doesn't seem like we made any fundamental changes to stop it from happening again.